Title Insurance Schedule B

Thanks, LR Day, That was fairly interesting. Anything I could add would only end up on the P&R side discussion (as usual), though from what I've been told title insurance policies will only compensate for actual damages.
Put it in P&R so us doom & gloom posters can trash the facade of the financial sector ??

I don't know aren't they saying: "4. Discrepancies, conflicts in boundary lines, shortage in area, encroachments, or any other facts which a correct survey would disclose, and which are not shown by the public records." that they aren't responsible or covering any problem later disclosed by a survey?

He said that those 7 items that are usually exceptions were deleted so that they are now insured by the Title Company. At least that is the way I read it.

On Schedule B - Section 1

Requirements

3. Upon Compliance with the Company's underwriting requirements, Items 1 - 7 0n Schedule B-2 will be deleted on the ALTA Loan Policy and on any Homeowners Policy.

The Closer went over this with me and assured me this was the case. I didn't want the Homeowners Policy, didn't think it was worth the money. I didn't have any choice and couldn't save the money. The seller, Fannie Mae, paid for it, required it.

Anyway, I suppose I should thank the US Taxpayers. Ya'll took about a $100,000 hit on the deal and I paid top dollar because it was a piece of land I really wanted. If I'd wanted to play hardball, wait it out, and take the risk of some one else buying it I probably could have saved another $30,000 or so.

Multiply this my hundreds of thousands of properties all across America. The folks taking the hit aren't the ones that caused the problem and made all the profits.

Everyone else is making the bucks but not the surveyors on this boondoggle.

You are right, I didn't read it carefully before I responded.

I think the average property doesn't have any boundary problems until 1) they want to build something or 2) the neighbor claims the fence needs to move (the obvious direction).

I walk around downtown Sacramento where there is virtually no Survey control other than the curbs which are not original and see that most people are living in peace.

One person called from down there but I don't have the energy to try to explain to deaf ears that it isn't so simple a problem.

Another previous client called about a property in the suburbs, 1926 subdivision. Thank gawd I had enough sense to tell her it isn't simple, it would require a multi step process starting with research then field recon. This is one of the first subdivisions with curva-linear streets and could be big trouble. She talked to some of her new neighbors and they confirmed what I told her. There are known problems. Looking at the aerial photo it looks like the Plat is just a suggestion or a convenience and the math on it is not necessarily reality.

Pretty interesting!

I know title companies here have been willing to issue ALTA polices covering matters of survey without actually having a survey done, but this certainly takes it a bit further.

I spoke to a title officer a few years ago when I first saw this and he explained that they are willing to do this in situations where they have enough history to feel they are covered. They particularly seem willing to take the risk in older established plats.

They are, after all, "insurance" companies, and likely have done some actuarial work that tells them how many times these issues have come up and then can place a value on it. Considering a plain-jane title policy, which covers virtually nothing and is generally limited in payout to the amount paid for the policy, the extra grand or so they get for several hundred of these could easily pay for the 1 in 100 that turns into something. And that's on top of what someone else here said about only paying for actual damages, which have to be incurred before they will pay out. Meaning lots of time and out of pocket extra costs on the part of the policy holder.

Make em pay

I actually am aware of one of these properties with a big problem. My kids made an offer on it. It has history and the description involves a big issue I got involved with about 5 years ago. A surveyor proportioned a quarter corner which moved the long established line so far north that the parcels he was surveying went across a UDOT right of way in place for 60 years and a county road for 70 years before that. He actually did the survey and the descriptions are official in the record. During my kids offer process I brought up the boundary issue. I was promptly sent the plat back and basically told I didn't know what I was talking about (clean plat no mention of a UDOT road crossing it). I had been out and checked the lot and found the back corners but the front corners across the road in the field had been plowed out. This UDOT ROW actually has markers, two only about 50 feet from the lot. I'm just itching to get involved with this. Be interesting if the title policy will pay for the shortage in area and the undisclosed ROW, which I believe is in fee. I might even do this one for free just to settle the ongoing argument about it.

Like I said in a thread a few days ago. I've never seen UDOT move a highway yet due to a freshly proportioned section corner. It ain't going to move now either!

Heres my take on Title Insurance.
They are regulated on what they can charge for a policy. With minimal claims to pay out, the rate stays the same. If they have more claims they can petition to raise rates to recoup their loses. For each policy they write, about $75-100 goes to pay for claims. I think they want to have more claims so they can start charging more for the policies.
Just my opinion.

SD

The Title Companies here are limiting their liability to the fee paid for the policy, so it really is no risk to them...

> I spoke to a title officer a few years ago when I first saw this and he explained that they are willing to do this in situations where they have enough history to feel they are covered. They particularly seem willing to take the risk in older established plats.
>
> They are, after all, "insurance" companies, and likely have done some actuarial work that tells them how many times these issues have come up and then can place a value on it. Considering a plain-jane title policy, which covers virtually nothing and is generally limited in payout to the amount paid for the policy, the extra grand or so they get for several hundred of these could easily pay for the 1 in 100 that turns into something.

This is absolutely true, and has been for some time now. The ratio of 1 to 100 is probably overstated.

Over the years, title insurance companies have seen just how small their risk is.

After all, of all the properties any of us surveyed over the past twelve months, how many had a title problem of any kind, large or small?

Now, of those, how many had a title problem that couldn't be resolved by a boundary line agreemment or some other action which did not incur major expense on the party of the title company or the owner?

And of those that couldn't be resolved, how much actual damages were incurred by the insured party?

Interesting too on what they will insure for favored clients. I surveyed a large parcel with a meandering sewer easement wandering through it. Most of the easement could not be plotted because someone had left off three courses (it was obvious). When one of our municipalities was thinking of buying the land the title company removed the sewer easement from Schedule B because the description was defective. I objected strongly because at least some of the easement was clearly in the middle of the site. No matter, they were willing to cover it. That deal fell through, then a developer bought the property. When I updated the survey, there was the sewer easement back in the title report, as it should have been all along.

Bruce,

Was there a sewer on the site, just with a defective easement description?

Good question, but it has been too long and I can't remember.

You mean you dont remember every job you ever did?:-)

I remember someone calling a few years ago and asking my grandfather if he remembered what side of the tree he set a property division corner in 1970. They were even a little pissed that he couldnt remember without pulling the job folder or field book.