Title Insurance

Title Insurance

Lenders always require that the buyer pay for a Lender’s Policy of Title Insurance, there is no law or other requirement that the buyers also purchase an Owner’s Policy of Title Insurance. Nevertheless, except in those few instances in which a buyer will have a lawyer prepare a Title It is advised to have buyers purchase an Owner’s Policy of Title Insurance. Otherwise, if a title defect is later discovered, the buyer will be responsible for correcting it. That can and often does involve thousands of dollars in fees.

Prior to the closing, the title insurance company will issue a “Commitment”. That is essentially a preliminary statement as to the status of the title. It is important that the buyer have an opportunity to see that Commitment before the closing. If it is sent to your Realtor, be sure it is promptly forward to you. If it is not sent to you, be sure to confirm that you has receive it from the title company.

Every Commitment includes a Schedule B which is often divided into B-I and B-II. The matters in Schedule B constitute exceptions to the title insurance. In other words, the Title Insurance Policy will not cover those matters. Often, if someone makes a request of the closer, she will be able to delete some of those exceptions, such as the “Standard Exceptions” and items that are being paid from closing, such as existing mortgages, liens and taxes. However, there are many items which will remain on the title to the property and cannot be deleted. Typical examples are Declarations of Protective Covenants and easements. If Schedule B refers to items of that nature, the buyer should have an opportunity to review the document which is referenced. Thus, if the Declaration prohibits the raising of pigs and chickens, the buyer should know that. Similarly, if the Declaration prohibits the construction of an out-building, a pool or a sports court, the buyer should know that.

Particular attention should be paid to easements. Most newer properties have easements along the rear or side five feet for utility and drainage. Those easements typically do not interfere with owner’s use and enjoyment of their property. However, some easements can be quite significant. Easements for such matters as gas pipelines, electrical transmission lines and conservation can dramatically limit how a person can use his or her property. If you see those types of easements in a Title Commitment, be certain to bring them to the attention of your Realtor.

Finally, if your is concerned about the Commitment or any of the documents associated with the Commitment, it is prudent for you to seek the advice of your own attorneys. Lawyers are trained to read and understand documents which affect the title to real property.