Title Insurance

The title insurance policy protects you against covered financial losses associated with claims against the title that were not discovered during the title search process. It also protects you against the rejection of title by the subsequent buyer of your property due to pre-existing title defects. It also covers losses that may arise after the property is sold if title covenants were included in the sales contract: this includes attorney fees and costs associated with defending the title and insures that the policy holder is the legal owner and has access to the property. Since the final title insurance policy may have some coverage exceptions (such as conditions, utility and other easements or set-back requirements), please read the coverage information carefully and thoroughly for specific policy provisions. Most lenders require that you purchase a title policy that covers only their loan. This policy insures that the financial institution has a valid and enforceable lien on the property in the event the loan is not properly repaid or is delinquent. Therefore, it does not protect your equity in the property. If a title claim is made, the lender’s coverage comes into effect only after your equity in the property is exhausted. To protect against this, there are two options: Types of Owner’s Coverage—Standard or Enhanced

Standard: protects your equity from various title defects as well as the cost of any legal defense of your title. Among other items, coverage includes protection against: creditor claims; deeds executed under false or expired powers of attorney; mistaken interpretation of wills and trusts; fraudulent or incorrect representation of marital status; errors arising from estate administration; undisclosed heirs; mistakes in recording; incorrect legal descriptions; forged documents; federal and state inheritance and gift tax liens; errors in the conduct of a foreclosure; errors in tax records; capacity of foreign fiduciaries; duress in execution of documents; deeds from minors or non-existent entities; discovery of a later will after probate of a prior will; and easements by prescription not discovered by survey.

Enhanced: provides even greater protection beyond the standard policy. It includes automatic inflation protection up to 50% above your purchase price; enhanced access coverage; building permit and zoning violation coverage; subdivision law violation coverage; enhanced encroachment coverage; mechanic’s lien coverage and post policy forgery.

Here’s a comparison of typical coverage in standard and enhanced policies

Protection from financial loss due to: Standard Enhanced
Ownership Title: another party claiming an ownership in your home X X
Public Record Errors: issues relating to an improperly signed document or a document recorded inaccurately at the county recorder’s office X X
Fraud & Forgery: another party having rights to your property arising from forgery or false impersonation X X
Undisclosed Heirs: an unknown heir claims an ownership interest in your home X X
Liens: a creditor of the previous owner attempting to enforce a lien X X
Access: discovering you do not have actual physical access to your home, e.g., you don’t actually own the driveway to a property X
Subdivision Law: loss from a violation of a subdivision law resulting in the inability to obtain a building permit * X
Building Permit: if you are forced to remove or remedy your existing structures, other than boundary walls and fences, because they were constructed without obtaining a proper building permit * X
Zoning: if you are required to remove or remedy your existing structures, other than boundary walls and fences, due to a violation of a zoning law * X
Encroachment: (your structures on neighbor’s property) your neighbor forces you to remove an existing structure(s), which encroaches onto neighbor’s land (boundary walls or fences are subject to a deductible) * X
Encroachment: (neighbor’s existing structures encroaching on your property) your property becomes unmarketable because someone refuses to perform a contract to purchase, lease it, or make a mortgage loan due to your neighbor’s structure encroaching on your land X
Encroachment: (neighbor creating encroachments after closing) if your neighbor builds any structures after the Policy Date, other than boundary walls and fences, that encroach on your land X
Encroachment: (your structures encroaching an easement) if you are forced to remove a structure that encroaches onto an easement or over a building set-back line X
Easements: loss arising from damage to an existing structure due to the exercise of a right to maintain or use the easement X
Surface Extraction: loss from damage to existing improvements due to the future right to use the surface of the land for the extraction or development of minerals or water X
Covenants, Conditions, Restrictions: if you are forced to remove or correct a violation by a previous owner X
Supplemental Taxes: supplemental or “roll back” taxes for a period before the policy date X
Continuation of Coverage: provides ownership coverage to anyone who inherits the property; a spouse who receives title upon dissolution of marriage; the trustee to whom the insured transfers title and the beneficiaries of a trust. X X
Automatic Increased Coverage: policy liability coverage increases 10% per year for 5 years to a maximum of 150% of the initial policy amount X

* Coverage is limited to deductibles and maximum dollar amounts of liability. Note: This is a basic comparison of title insurance policies. Please request a sample title policy for complete details.