Grounds for Title Insurance Claims

> Does anyone know what are the possible grounds for filing a claim on a title insurance policy? I know if it turns out that whoever sold you the property didn't have title, that would be grounds, but how about finding an easement or right-of-way that is not referenced in the deed or is contained within the Schedule B, Section 2 list? If so, what kind of payout do you get if it does not effect the title of the entire property?

If they missed a recorded easement affecting the property in section B-2, then they would typically pay out the value of the easement right. There's always a possibility they missed the termination document or that there is a termination clause within the easement that renders the easement non-existent.

The fact that the easement isn't listed on the deed is typically of no concern.

JBS

It is my understanding the most title insurance that is sold along with a land purchase transaction only protects the company issuing the mortgage and would provide no indemnification to the person who actually bought the land.

Perhaps I am wrong. I often am. Ask my wife...

That is a legitimate issue. What the property owner must do is ask for an Owner's Policy in addition to the Lender's Policy at the same time. In our area the standard fee for the Owner's Policy is something like $50 or $100. So add that amount to what you would pay for the Lender's Policy. The problem is that too many times the homeowners do not realize they are not getting any coverage for themselves. The title company or someone else knowledgeable in the transaction must point it out to the generally ignorant homeowners.

When you pay off the mortgage, the Lender's Policy ends. The Owner's Policy is good so long as you continue to own the land. Another thing the average landowner does not realize is that the Lender's Policy is only good for the amount of the mortgage. The Owner's Policy needs to be for the full value of the property. If the landowner later makes a major improvement to the property which greatly raises the property value, they need to approach the title company to raise their coverage, the same as raising any other insurance coverage you have. Very simple process.

JB, Please elaborate on how an Easement that is not listed in the Exceptions would not typically be of concern. If it is listed, the title company is excepting it from the policy. I must be missing something. It seems that it would be very important if a claim was being made.

sounds like you got it right Holy. you gotta pay more to get more. otherwise the Title company is only warranting the title to the property is good, no liens, etc.

from my wife, an escrow officer in SA.
"The T-19 endorsements insure against claims for matters related to the CCR’s, easements, etc. The lender’s always require this, but it is optional for the buyer."