Title insurance plays a crucial role in protecting the rights and interests of property owners. It provides coverage against potential defects or issues that may arise with the title of a property. When it comes to incorrect surveys and boundary encroachments, there are specific types of title insurance policies that can help safeguard against these problems. In this article, we will explore what type of title insurance covers defects of an incorrect survey and boundary encroachments, along with some interesting facts about title insurance.
1. ALTA Extended Coverage Title Insurance:
One type of title insurance that covers defects of an incorrect survey and boundary encroachments is ALTA Extended Coverage Title Insurance. This policy provides more extensive coverage than a standard title insurance policy.
2. Survey Exception:
In most title insurance policies, there is a survey exception. This exception means that the policy does not cover any issues that may arise due to an incorrect survey or boundary encroachments.
3. Endorsement for Survey Matters:
To overcome the survey exception, property owners can opt for an endorsement specifically designed to cover survey matters. This endorsement provides coverage for defects in the survey and any resulting encroachments.
4. Boundary Encroachments:
Title insurance policies typically cover boundary encroachments caused by improvements made by the insured owner. However, if the encroachment was created by a previous owner, it may not be covered.
5. Obtain a Survey:
To ensure proper coverage, it is crucial to obtain an accurate survey of the property before purchasing title insurance. This will help identify any potential defects or boundary encroachments that may need to be addressed.
Now, let’s explore some interesting facts about title insurance:
Interesting Fact 1: Title Insurance is a Unique Type of Insurance
Unlike other insurance policies that protect against future events, title insurance provides coverage for past events that may affect the property’s title.
Interesting Fact 2: Title Insurance is a One-Time Payment
Unlike other insurance policies that require regular premium payments, title insurance is typically a one-time payment made at the time of property purchase.
Interesting Fact 3: Title Insurance Protects Against Hidden Issues
Title insurance protects against hidden issues that may not be discovered during the title search process, such as fraud, forgery, or missing heirs.
Interesting Fact 4: Lender’s Policy vs. Owner’s Policy
There are two types of title insurance policies: lender’s policy and owner’s policy. The lender’s policy protects the lender’s investment, while the owner’s policy protects the property owner’s interests.
Interesting Fact 5: Title Insurance Rates Vary
Title insurance rates can vary depending on factors such as the property’s value, location, and the coverage amount. It is essential to shop around and compare rates from different title insurance companies.
Now, let’s address some common questions about title insurance:
1. Is Title Insurance Mandatory?
While title insurance is not legally required, most lenders will require a lender’s policy to protect their investment.
2. How Much Does Title Insurance Cost?
The cost of title insurance varies depending on factors such as the property’s value and location. It is typically a small percentage of the property’s purchase price.
3. Can Title Insurance Be Transferred?
No, title insurance is not transferable. If the property ownership changes, a new title insurance policy must be obtained.
4. Does Title Insurance Cover Liens?
Yes, title insurance typically covers liens on the property. However, it is essential to review the policy’s terms and conditions for specific coverage details.
5. Does Title Insurance Expire?
No, title insurance does not expire. It provides coverage for as long as the insured owns the property.
6. Does Title Insurance Cover Boundary Disputes?
Yes, title insurance can cover boundary disputes if they arise due to a defect in the property’s title.
7. What Does a Title Search Include?
A title search includes an examination of public records to determine the property’s ownership history, liens, mortgages, and any other potential issues.
8. Can Title Insurance Be Obtained After Closing?
Yes, title insurance can be obtained after closing, but it is recommended to purchase it during the property purchase process to ensure comprehensive coverage.
9. Does Title Insurance Cover Zoning Issues?
No, title insurance typically does not cover zoning issues. However, specific endorsements may be available to provide coverage for zoning matters.
10. What Happens if a Title Defect is Found?
If a title defect is found, the title insurance company will work to resolve the issue. This may involve legal action or compensation for any resulting losses.
11. Is Title Insurance the Same as Homeowner’s Insurance?
No, title insurance and homeowner’s insurance are different. Title insurance protects against issues with the property’s title, while homeowner’s insurance provides coverage for property damage and liability.
12. Can Title Insurance Protect Against Fraud?
Yes, title insurance can protect against fraud, such as forged documents or fraudulent transfers.
13. Can Title Insurance Be Cancelled?
Title insurance policies are generally non-cancelable. Once issued, they remain in effect for as long as the insured owns the property.
In conclusion, when it comes to incorrect surveys and boundary encroachments, obtaining ALTA Extended Coverage Title Insurance and the necessary endorsements for survey matters is crucial. Title insurance provides peace of mind by protecting property owners from potential defects or issues that may arise with the property’s title, ensuring a smooth and secure ownership experience.