Title Tips
Authored by Philip J. Rygg

on title insurance coverage …

Title insurance policies offer either extended coverage or standard coverage. Both contain the same basic insuring provisions, exclusions, conditions and stipulations, except extended coverage is broader coverage.

Extended coverage requires an on-site inspection and costs about thirty percent more then standard coverage. Most lenders require "extended" coverage. Owners, on the other hand, usually require standard coverage. (Title insurers usually don't offer extended coverage to owners.)

SCHEDULE A of every title insurance policy includes the following provisions:

• the amount of the policy which is usually based on the value of the real estate. Most insurers agree that the amount of the policy should never be less then the value of the real estate;
• the date of the policy - imporant because the title search covers everything up to the time and date set forth on the policy. Usually this is the date and time that the instrument creating the the interest to be insured is recorded;
• the exact name of the parties for whom the policy is being written - the insured; (Where a deed or lease runs to "John Doe and Mary Doe, his Wife", some insurers advise against adding the words "his wife", taking the position that they are not called upon to insure that John Doe and Mary Doe are legally married)
• the legal description of the property which should be set forth exactly as it appears in the instrument to be recorded.

SCHEDULE B lists, in two sections, everything that is not covered, or that is "excepted" by the policy.

• the amount of the policy which is usually based on the value of the real estate. Most insurers agree that the amount of the policy should never be less then the value of the real estate;
• the date of the policy - important because the title search covers everything up to the time and date set forth on the policy. Usually this is the date and time that the instrument creating the the interest to be insured is recorded;
• Section 1 (General Exceptions) sets forth the uninsurable matters such as the General Exceptions (which appear only on standard coverage policies) listed below:
  
  1. Taxes or assessments not shown in public records
  2. Facts, rights, interest, or claims not shown in the public record, but which could be discovered by a through inspection
  3. Easements, claims of easement or encumbrances not shown in the public record
  4. Boundary or encroachment disputes
  5. Unpatented mining claims, reservations or exceptions in patents, water rights and claims thereto
  6. Construction or mechanics liens
• Section 2 (Special Exceptions) takes exception to mortgages, liens, easements, outstanding interests, servitudes, and other encumbrances.

The Conditions and Stipulations of the Policy provide for the following:

• Coverage even after the insured has sold or has otherwise disposed of the property
• A statement agreeing to defend, at it's expense, any attack made against matters provided for in the policy
• A reasonable length of time to clear up title problems rather then pay a loss
• Exclusions from coverage for problems which result in no loss to the insured
• Insurer's right to recover from third parties who bear responsibility

 

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