South Carolina Lawyers Weekly
Whitlock v. Stewart Title Guaranty Co. (Lawyers Weekly No. 002-040-11, 8 pp.) (R. Bryan Harwell, J.) D.S.C.
Holding: A title insurance policy’s exclusion for loss resulting from government police power or regulation concerning land use and improvements on the land does not apply “to violations or enforcement of these matters which appear in the public records at Policy Date,” which was Oct. 30, 2006. The exclusion thus does not apply to an Army Corps of Engineer spoilage easement on record since the 1930’s, nor does it apply to a 2003 county resolution which prohibits building permits except to replace existing structures.
The court grants partial summary judgment for plaintiff on the issue of liability. The issue of damages is stayed pending certification of a question to the S.C. Supreme Court.
The title insurance policy’s Exclusion 1 reads in part, “You are not insured against loss, costs, attorneys’ fees and expenses resulting from governmental police power, and the existence or violation of any law or government regulation. This includes building and zoning ordinances and also laws and regulations concerning:
• land use
• improvements on the land
• land division
• environmental protection
“This exclusion does not apply to violations or the enforcement of these matters which appear in the public records at Policy Date. This exclusion does not limit the zoning coverage described in Items 12 and 13 of the covered title risks.”
The Army Corps of Engineers has had a recorded spoilage easement on the property at issue for dredging the Intracoastal Waterway since the 1930’s. By its own terms, Exclusion 1 does not apply to the spoilage easement.
Defendant argues that the county resolution does not constitute a “public record” under S.C. Code Ann. ¤ 30-7-10. Under ¤ 39-7-10, all deeds, mortgages, liens, and “generally all instruments in writing conveying an interest in real estate required by law to be recorded in the office of the register of deeds … are valid so as to affect the rights of subsequent creditors … or purchasers for valuable consideration without notice, only from the day and hour when they are recorded in the office of the register of deeds … where the real property affected is situated.” Plaintiff contends that a government regulation is inherently a public record and that, as a result, the policy provides coverage.
The court must construe the policy exclusion against the drafter (here, the defendant-insurer) and must also consider the purpose of the policy, read as a whole. The title policy provides broad coverage for title problems caused by zoning laws and for laws and regulations concerning land use and improvements on the land. Zoning designations are part of the “public records.
The insurance company could have easily defined the term “public record” as not covering zoning laws.
Therefore, the exclusion does not apply as a matter of law because the term “public record” is patently ambiguous and should be construed as covering local zoning regulations.
Additionally, Exclusion 1 states that it does not limit the zoning coverage described in Items 12 and 13 of the covered title risks. Item 13 of the covered title risks refers to zoning laws that prohibit use of the property as a single-family residence.
“Single family residence” is not defined in the policy. Plaintiff argues that “single family residence” ordinarily means site-built homes, while the insurer argues that it also includes mobile homes.
Horry County will not allow plaintiff to obtain a permit to build a site-built home on the property. She has a mobile home on the property.
The court finds that the term “single-family residence” is patently ambiguous and must be construed against the drafter so as not to include a mobile home. Therefore, plaintiff cannot use the land for a single-family residence because of the zoning law, and Exclusion 1 does not apply.
Motion granted.
