Albuquerque, New Mexico – By necessity, title to land is often established by sworn statements from knowledgeable parties. This is not fool-proof practice.

Years ago the subject property was owned by a married woman, Isabel, as her sole and separate property.

In 1984 Isabel died, leaving her husband, Todosio, and seven children.

In 1991 Todosio deeded the property to his son, Orlando. Orlando signed a mortgage against the property for $100,000 and First American insured the lender, relying on Todosio's sworn affidavit that the property was the homestead and community property of Isabel and Todosio, to which Todosio was entitled upon her death by New Mexico law.

By 1993 the loan defaulted and the lender began judicial foreclosure. Isabel's six other children intervened, claiming this was never community property but always the sole property of Isabel. The six children claimed to inherit a 3/4 interest in the property.

In court, Todosio testified he was duped by Orlando. He claimed only a fourth-grade education, and said he did not read or understand the deed or affidavit when he signed them.

The judge ruled in favor of Todosio and the six children, whereupon First American paid $69,019 to eliminate their interests, plus legal expenses of $9,981.

Neither an attorney opinion letter nor other forms of title assurance are designed to give protection against a questioned or false affidavit relating to condition of title to land. Such affidavits must frequently be relied on to clarify marital rights, and to establish nonexistence of undisclosed heirs, judgment or tax liens, and other potential defects.

This is another of the "hidden risks" uniquely covered by title insurance.