The Superior Court of Connecticut recently held that insured owners were barred from coverage under a title insurance policy for an easement that the policy did not disclose because the sellers had informed the insureds about the easement before the closing, even if the insureds had misunderstood the scope of the easement.  See Pamela Egan et al. v. Eastland Title Servs., Inc. et al., 2017 WL 5202842 (Conn. Super. Ct. Sept. 29, 2017).  In the case, the insureds purchased a property and obtained a title insurance policy.  According to their complaint, after the purchase, they learned that the property was subject to an easement not disclosed in the title report.  They filed a claim with the title insurance company and, after the title insurance company denied the claim, filed a lawsuit against the title insurance company and the sellers.  The title insurance company then moved for summary judgment, arguing that the insureds knew about the easement before purchasing the property and that the claim therefore was barred under a policy exclusion for risks “that are created, allowed, or agreed to by [y]ou.”

The Court agreed and granted the motion.  First, it found that the sellers provided the insureds with a property condition report that stated “[n]eighbors have ROW near water to access their property.”  Second, it found that the real estate agent had informed the insureds of the easement when they visited the property.  The insureds did not deny these facts, but argued that they only had been informed that the neighbors had the right to cross the property in a “lawn tractor,” and were unaware “that the easement permitted their neighbor to repeatedly drive vehicles across the . . . property to access the waterfront.”  The Court nonetheless held that, even if the insureds misunderstood the scope of the easement, this does not preclude the application of the policy exclusion.  “The policy exclusion cannot be read to require full knowledge and understanding of an easement; rather, it simply excludes losses ‘that are created, allowed, or agreed to by [the insureds].’”

For a copy of the decision, please contact Michael O’Donnell at modonnell@riker.com or Clarissa Gomez at cgomez@riker.com.