I will pose this as a hypothetical question, it is information gleaned from a phone call from a prospective client.
I turned it down.
A home is in escrow with a closing date of next week. Ten days prior to closing, neighbor of subject property sends an email stating that a gate post is encroaching. Neighbor provides no survey or other information.
Title Company immediately updates prelim and excepts this post area from coverage.
Lender now will not lend unless exception is removed with an ALTA survey.
What is the clients next step, is it that easy to kill a million dollar deal?
Was the Title Company action appropriate or actionable?
As an insurance risk factor, hearsay evidence is enough to trigger an exception. I have seen them based upon "Google Earth" source. The key is stating the source: record document, or whatever. Removing the exception will, as the policy states, require a surveyor assuming that risk. (OK, the policy doesn't state assumption of the risk, but it's implied through the "correct survey" clause.)
Footsteps Jay, post: 335130, member: 1653 wrote: Was the Title Company action appropriate
Yes. It is also Prudent.
They do not want to Insure and Defend what they understand to be a possible new problem beyond their first proposal.
This is the nature of all Insurance.
(I bet $5 they would be glad to drop that exception for an enhanced premium)
The exception is probably redundant. Don't they already except any problem that would be revealed by a survey?
I am splitting my decision.
The Insurer did what Insurers do. They protected the underwriters by excepting a potential risk.
On the flip side, requiring an ALTA survey rather than a certified exhibit is over the top. A few phone calls and a little crew/drafting time should have been enough.
Once that's taken care of take up a collection for a Cymbalta scrip for the neighbor...
Footsteps Jay, post: 335130, member: 1653 wrote: is it that easy to kill a million dollar deal?
Yes!
million dollar deal and the buyer is balking at the cost of an ALTA (and sees no need for one)?
I Hate insurance too but people are strange.
If they can't afford a survey, they need to stay in their present home.
Had they paid for survey already, the problem would have been taken care of already.
Any title policy written today has an exception clause that means no insurance claims can be dealt with till a survey has been made.......
"not worth the paper they written on" comes to mine here.........
A Harris, post: 335183, member: 81 wrote: If they can't afford a survey, they need to stay in their present home.
Had they paid for survey already, the problem would have been taken care of already.
Any title policy written today has an exception clause that means no insurance claims can be dealt with till a survey has been made.......
"not worth the paper they written on" comes to mine here.........
Not quite right. The Survey exception generally is: "This is an exception that the title insurance company includes in a policy if there is no satisfactory survey of the real property described in the policy. The general survey exception excepts from the policy any state of facts that an accurate survey and inspection of the land would show."
A Standard Title Insurance would pay off concerning the loss of an interest in a property due to legal defects which would *not* be revealed by a proper survey and inspection, such as:
Forgery and impersonation;
Lack of competency, capacity or legal authority of a party;
Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner);
Undisclosed (but recorded) prior mortgage or lien;
Undisclosed (but recorded) easement or use restriction;
Erroneous or inadequate legal descriptions;
Lack of a right of access;
Deed not properly recorded.
A Harris, post: 335183, member: 81 wrote: If they can't afford a survey, they need to stay in their present home.
Had they paid for survey already, the problem would have been taken care of already.
Any title policy written today has an exception clause that means no insurance claims can be dealt with till a survey has been made.......
"not worth the paper they written on" comes to mine here.........
Few States require showing possession on Surveys and I'm seeing fewer Surveyors noting it. The problem may have been left off. I am not aware of any that require an ALTA which is what the Title Company is requiring.
I don't see why anyone would buy a house without a survey. It certainly shouldn't prevent them from buying one. Risk reward decisions are a personal matter.
Mike Marks, post: 335240, member: 1108 wrote: Not quite right. The Survey exception generally is: "This is an exception that the title insurance company includes in a policy if there is no satisfactory survey of the real property described in the policy. The general survey exception excepts from the policy any state of facts that an accurate survey and inspection of the land would show."
A Standard Title Insurance would pay off concerning the loss of an interest in a property due to legal defects which would *not* be revealed by a proper survey and inspection, such as:
Forgery and impersonation;
Lack of competency, capacity or legal authority of a party;
Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner);
Undisclosed (but recorded) prior mortgage or lien;
Undisclosed (but recorded) easement or use restriction;
Erroneous or inadequate legal descriptions;
Lack of a right of access;
Deed not properly recorded.
I stated my position unclearly because even though I've dealt semi pro bono as part of the development-engineering package with hundreds of title policies (based on the record to either accurately map encumbrances, declare a schedule B item does not affect the subject parcel and should be removed or the encumbrance is general in nature and cannot be plotted (blanket easements of irrigation districts, powerlines, et. al. usually of ancient provenance)). If an actual (ALTA) survey is involved (I make money) to eliminate the Schedule B "those facts shown by a proper survey" clause, encroachments, oddities, actually anything I can see (a municipal ditch on the back line, neighbor's improvements across the line, a strange manhole onsite, obvious access encroachments) will serve notice on the map and the title company will exclude them; *but* my work covers nothing underground (unless potholing occurs) and no notice of encumbrances not shown on Schedule B if cannot be seen in a survey. Title companies love me when I'm on the team because my input sharpens what is actually being transferred at sale concerning ground conditions, not title, and I'm assuming some liability for my pay. Better for all parties involved.
This court case crystallizes the relationship between surveyors and title companies:
"Everyone appreciates that title insurance policies insure titles to real property, not the property itself. There is a difference between a defect in the soil of property and a defect in the title to that soil, with only the latter being covered by a title insurance policy. But while the difference between the two may often be clear, their paths are often murky and convergent. A faulty condition of property frequently must follow a long, winding course before it elevates itself to a condition of title that a title insurer must report to its customer. The property flaw may start life as a mere potential defect in property (e.g., a loose screw in a piece of wood) that everyone except a fussy owner may ignore, both physically and from a title perspective. If the condition gets too bad (the screw gets too loose), someone (e.g., a tenant or a neighbor) may complain about it, and someone else (such as a building inspector) may do something about it,e.g., order its repair."
http://digitalcommons.law.ggu.edu/cgi/viewcontent.cgi?article=1745&context=pubs
We deal with the soil, title companies deal with title.