Title Insurance

Title insurance is a necessity in owning property. The core of a title insurance policy is protection against:

  1. Errors or omissions in deeds
  2. Mistakes in examining public records
  3. Misfiled or lost public records
  4. Forgery in previous conveyances
  5. Undisclosed heirs and probate errors

In modern times, title insurance policies may also routinely insure that the property has valid legal access, is compliant with zoning and subdivision regulations, and even that the property has valid utility easements serving the property. Commercial and investment property have dozens of optional endorsements available in addition to the standard title policy. These may often be required by lenders, or may be obtained simply for the protection and peace of mind of the buyer.

One aspect that often goes unmentioned though is what is commonly referred to as the "survey exception". Near the back of most title insurance commitments are "standard exceptions" which are matters that the title policy will not insure against. These commonly include unrecorded claims, taxes and liens that are due after the date of the title examination and policy, etc. This is understandable, and of no surprise. But the one that can really come back to a property owner later is the "survey exception". Varying according to the title insurance company and type of policy, this exception generally omits coverage against any encroachment, overlaps, encumbrance, boundary line dispute, or other matters which would have been disclosed by a current survey. What qualifies as "current" varies but is generally between 30 and 90 days of the date of the title examination.

This means that if any of these matters exist at the time of the title examination, but a current survey is not used in conjunction with the closing and title policy, they will not be covered under the title policy. Though we all want to be insured against an error of a filing clerk in the 1970s or an imposter selling someone else's land, the matters that the "survey exception" encompass are the among most common problems associated with owning property. This doesn't keep people from filing title insurance claims regarding these matters, but title insurance companies routinely determine that a current survey would have revealed the problem prior to the policy being written, and thus deny coverage. Part of their logic is that the parties involved would have been alerted to the matter and could have resolved or addressed it prior to closing, but chose not to by not obtaining a current survey.

Below are two actual title insurance policy exception schedules (used by owner's permission). Select one to view.