Welcome to the Neighborhood: Where new owners were greeted by the IRS.	Holy Toledo: When two families found their assets at risk for the debt of another, title insurance was a godsend.

Incline Village, Nevada -- First American insured buyers of this residential condominium overlooking Lake Tahoe for $185,000.

Just prior to closing, our examiner checked public records at the Washoe County Recorder's Office to rule out the possibility of a last minute filing which might affect title. This "last look" revealed nothing, and the sale closed November 6, 1995.

Several months later our insured owners heard from the IRS, which threatened to enforce a tax lien against their new home.

An attorney hired by First American soon learned that the IRS had, indeed, recorded a federal tax lien against the seller, D.T. Frame, on November 1, 1995. The amount claimed due was $318,671. It mattered not that our insureds were innocent bystanders.

Our examiner missed the tax lien because the recorder's office originally indexed it under the name "DT Frame," so it was not located when we searched under "D.T. Frame." The recorder's computer was not programmed to accept periods for indexing purposes.

First American settled with the IRS, paying $144,000 for a release of the tax lien. The Company also incurred legal expenses of $3,620.

Meanwhile, the recorder's office has tweaked its computer system so it now handles periods.

Toledo, Ohio -- Several years ago this was the home of Mr. & Mrs. Stark. As his investment in a downtown athletic club foundered, a judgment lien was recorded against Mr. Stark in the amount of $253,513. Mr. Stark deeded the property to his wife, who in turn sold it to Richard and Nancy. Two years later, Richard and Nancy sold the home to Henry and Edwina. This deed included a boilerplate warranty guaranteeing that the property was free and clear of undisclosed encumbrances, and that the sellers would defend buyers against claims to the contrary. New owners Henry and Edwina were insured by First American. It was almost eight years before the judgment creditor, a major bank, began efforts to enforce its judgment lien against Mr. Stark. It did so by filing a lawsuit against the surprised Henry and Edwina, seeking to force a sale of their home based on the judgment lien recorded during Mr. Stark's ownership.

First American provided legal defense for Henry and Edwina. We soon learned that the judgment lien had gone undetected because it was originally indexed in the computerized title plant used by local title companies under the name "Stank," instead of "Stark."

By the time this error was corrected, it was too late.

First American negotiated a settlement with the bank, and paid $147,500 for an assignment of the judgment lien. Then, knowing that prior owners Richard and Nancy also had title insurance, the Company made a claim against them based on the warranties of title given when they sold the home.

Another title company reimbursed $145,000 to First American, leaving the Company with a net loss of $18,850, including legal expenses.

Homeowners should be reminded that their owner's policy continues to provide coverage after property is sold, so long as they have any interest or outstanding warranty in connection with the property.

Apalachicola, Florida -- This quaint building in historic downtown Apalachicola was once owned by Bairn, Inc., whose president was a friend of one Lucky McLeod.

Lucky wanted to buy a shrimp trawler and needed to borrow $300,625. The lender required collateral in addition to its mortgage against the trawler, and agreed to accept a collateral mortgage against this property of Bairn's.

About two years later, Bairn sold the property to Kristin Anderson, who got an owner's policy from First American. Kristin, an accomplished artist and silversmith, opened a shop in the building, called the "Long Dream Gallery," where she sells handmade jewelry and sculptures.

Kristin tells us that she was barely aware of title insurance when she purchased the property. She now says that it, title insurance that is, seems the best investment she ever made.

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