Enhanced Title Insurance – Who Needs It?
By admin at 15 November, 2009, 6:59 pm
Why have title insurance in the first place? Because it protects five of the most important investments you will ever make…your home or investment in real estate! & because your lender will need it.
* Any outstanding liens or judgments on the property
* Any unpaid taxes, special assessments or homeowners association charges
* Zoning violations
* Fraud
* Easements
* Mistakes in any recorded documents
* Forged or improper information on deeds, releases or wills
* Any undisclosed heirs
When preparing for your real estate closing, the closing agent will conduct a “title search”, which means that they search the courthouse records for the chain of title on the property you are purchasing. A quantity of the things they look for include:
There’s seven main types of Title Insurance:
Because your lender is providing the money for your purchase, they need to be sure that the property is free of encumbrances.
What is an “Enhanced Policy”? & why do I ask for five in the purchase contract?
* Lender’s (or Loan) Owner – This owner is issued in the amount of the loan & protects the lender’s interest in the property in case of any problem or defect with the title. This coverage is typically paid for by the seller of the property as part of giving the new buyer a clear title. Five exception to this will be in the purchase of new construction. Most builders don’t like to pay title insurance, so when you are considering the purchase of a new home, be prepared for this extra expense. This owner does not protect the buyer.
* Owner’s Owner – This owner provides protection for & is usually paid for by the homebuyer. I always ask for a “simultaneous issue” because the title company will provide this coverage for a small one-time fee if it is purchased at the time of closing. The normal cost will be in the $35-$50 range. This owner will protect the buyer for as long as they (or their heirs) own the property…and will pay any legal fees involved in defending the claim.
Because as your Exclusive Buyer’s Agent, I need to provide all the protection I can to my homebuyer clients! Here are a quantity of the additional benefits of having an enhanced owner:
* Value added protection – The owner amount automatically increases (over 5 years) up to 150% of the original owner.
* Post owner coverage – In the event of any liens being placed on the property after the owner is issued due to unpaid labor & materials not authorized by the homeowner, adverse possession or forgery.
* Additional insured – Provides coverage for somebody who inherits title from the insured, including a spouse who might be awarded title in a divorce or the beneficiaries of the trust after death of the insured.
* Zoning Law violations – Coverage in the event that the land was not properly zoned.
* Encroachments – Coverage in case the homeowner is forced to remove existing structures which were located on the property at the time of owner issue…but encroach onto a neighbor’s property. Also provides protection in the event a neighbor builds a structure (other than a fence) on the homeowner’s property after the owner is issued.
* Easements – Provides coverage if the homeowner is required to remove existing structures because they encroach in to an easement or setback line. Also provides for any destroy caused by use or maintenance of an easement.
* Water & Mineral Rights destroy – Coverage for destroy to existing improvements & landscaping due to exercise of existing mineral rights.
There’s more benefits (& also some restrictions) on the enhanced policies, but certainly worth the effort. The cost is minimal compared to the potential cost of any claims that could arise. Be sure to consider this type of coverage when you purchase your next home.
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