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The Role and Importance of Title Insurance in Distressed Assets

CRA Annual Conference 2025 | St. Louis
Panelists: Stephanie Fogelson (Landmark Title), Hannah Ortega-Anayat (Stewart Title), Stephen Sanders (Stewart Title), Lisa Starks (Barnes & Thornburg)

Introduction

At the Commercial Receivers Association’s 2025 Annual Conference, industry leaders gathered to explore how title insurance plays a critical role in the restructuring of distressed assets. The panel “The Role and Importance of Title Insurance in Distressed Assets” highlighted the unique protections title insurance provides, common pitfalls in distressed real estate transactions, and lessons learned from case studies.

What is Title Insurance?

Title insurance is a uniquely domestic product, regulated by departments of insurance at the state level. It offsets risk by protecting against errors in public records, fraud, forgery, liens, and encumbrances that may threaten ownership.

Unlike traditional insurance, title insurance protects retrospectively—covering issues as of a specific date in time. It is generally issued as a one-time fee and remains effective as long as the insured maintains an interest in the property

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Panelists emphasized the dual structure of title services:

  • Title agents who facilitate transactions, handle documents, funds, and instructions.

  • Insurance companies who underwrite and provide the actual coverage.

Why Title Insurance Matters in Distressed Assets

In receiverships and other distressed transactions, title insurance ensures that parties can move forward with confidence. By providing clear title and addressing hidden risks, it:

  • Protects against financial loss from defects.

  • Ensures marketability of property.

  • Facilitates smooth transactions between parties.

From escrow and settlement to underwriting and issuance of a title policy, the process provides critical risk management safeguards

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Key Coverages and Processes

Commercial title insurance typically includes:

  • Owner’s policies, lender’s policies, and leasehold policies.

  • Endorsements that tailor coverage to specific risks.

  • Title commitments that outline coverage and exceptions.

The process involves title search, examination, and policy issuance—steps that help uncover issues such as:

  • Liens and encumbrances

  • Easements and rights of way

  • Zoning and land use restrictions

  • Findings revealed by ALTA surveys

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Legal and Practical Considerations

For legal counsel working with receivers or distressed asset managers, title insurance is not the practice of law but intersects closely with legal risk management. Attorneys are often called upon to:

  • Review title commitments and policies.

  • Advise on exceptions and endorsements.

  • Address defects and claims that may impact marketability.

Panelists stressed the importance of starting early, knowing what conditions a property is taken “subject to,” and disclosing issues frequently throughout the transaction

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Case Studies and Lessons Learned

The panel shared real-world examples where title insurance was pivotal, including:

  • Construction defect litigation where unresolved claims jeopardized ownership.

  • Debtor-in-Possession (DIP) loans on incomplete construction projects, where clear title was essential for financing.

Key takeaways:

  • Start early in the title review process.

  • Understand risks and restrictions upfront.

  • Disclose issues frequently to avoid future disputes

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Conclusion

As the panel demonstrated, title insurance is far more than a transactional formality—it is an essential tool for managing risk, ensuring clear ownership, and facilitating complex transactions in the distressed asset space.

For receivers, attorneys, and financial professionals, understanding how to leverage title insurance can mean the difference between a successful restructuring and a costly setback.