DO YOU HAVE A VALID TITLE INSURANCE CLAIM? CONDITIONS, STIPULATIONS, EXCEPTIONS AND EXCLUSIONS MAY APPLY PRECLUDING COVERAGE. Title insurance can help provide the home buyer and/or the mortgage lender necessary protection against losses resulting from unknown defects in the title to property that occurs prior to the closing of a real estate transaction. Title insurance policies are designed merely to cover only certain types of title defects. There are two types of title insurance policies: lender’s (mortgage loan) policies, and owner’s (fee or purchase) policies. The home buyer is generally responsible for paying for both policies. Lender’s Policy: Protects the lender’s interest in the property. The amount of insurance coverage is usually the loan amount. Most lenders require a Loan Policy when they issue a mortgage loan. The Loan Policy is usually based on the dollar amount of the loan and it protects the lender’s interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off. Owner’s policy: Protects the property owner up to the full original sales price of the property. Unlike mortgage policies, this policy’s amount of coverage does not decline over time. An optional market value endorsement can be purchased with the owner’s policy to keep pace with increases in a property’s value over time. In the event of a claim, the full market value of the property would be recoverable. (An owner’s Policy could also apply to Leasehold Policies and Construction Loan Policies.) Only an Owner’s Policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include: Errors or omissions in deeds Forgery Undisclosed heirs Mainly, standard form policies are used with information for each individual real estate transaction. Such policies specify coverage that is subject to: (a) the standard exclusions from coverage, (b) the individualized exceptions from coverage in Schedule B, and (c) the standard conditions and stipulations, the title insurance company insures, as of the date the policy is issued, against loss, not to exceed the policy limits, incurred by the insured by reason of: (1) title being vested other than as stated in Schedule A of the policy, (2) any defect in or lien or encumbrance on the title, (3) unmarketability of the title, and (4) lack of a right of access to and from the land. Other coverages are available depending on the types of policies issued. If you are uncertain if you have a viable title insurance claim, call an experienced lawyer to analyze the title issue and the title policy issued. The title company may reject coverage if the title issue falls within any exceptions, exclusions, conditions, or stipulations for coverage. Lori Hershorin is experienced in title insurance issues. She has handled and resolved title insurance claims, litigated claims through appeal, and served as a mediator for title matters.
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