Jim Valentine on Real Estate
Title insurance is one of those things in real estate that is involved in 99.9 percent of the transactions but is rarely understood by the buyers and sellers, and, oftentimes, even the agents.
Simply put, it insures your title, so you don’t have to worry about having it negatively affected by something such as a prior owner’s ex-spouse showing up claiming a portion of ownership. What is covered by title insurance is often misperceived with some thinking it covers more than it does while others thinking it doesn’t give much protection at all.
As with any industry, the title insurance business has been changing and is now offering some miracle coverages that even surprise title company management folks. Insurance is a risk business which dictates pricing and benefits based on the risks involved in the protection coverage. If you have title insurance on your current property, do you know if it covers your legal access, protection from prior owner HOA fines, or the location of your fence line?
In the past only the legal access would be protected by an extended coverage policy, and that was only legal access, not practical access. Today the ALTA policies, commonly known as extended coverage, cover myriad things, some of which are miraculous, inconceivable that an insurance company would take the risk. This is good for you as they are assuming potentially great risk. We received a list of 32 title risk items recently from a local/national title company.
Some highlights include:
A. You don’t have actual vehicular/pedestrian access to/from the land based on a legal right. You may have a legal access that is topographically impossible to improve. This ensures that you will have actual access to your property.
B. If you are forced to remove/remedy existing structures because any portion was built without obtaining a building permit.
C. If any of the following occurs after the policy date: someone else owns an interest, someone has rights out of leases, contracts, or options, someone has an easement on the land, someone has a right to limit your use of the land, or your title is defective.
D. A neighbor builds a structure post policy which encroaches on your land (not walls or fences).
As you can see, they are assuming the risk and responsibility for things far beyond their control. You are covered from past events not of record, future actions of neighbors and governmental agencies. This is far beyond the very conservative approach to coverage they have exhibited in the past. If a taxing authority addresses supplemental real estate taxes not previously assessed, you are covered.
You are even covered if your property is taken due to a violation of any CC&R that occurred prior to your taking title. There are some limitations in different coverage items which can include deductibles and limited coverage. Be sure to review the policy details and make sure that it covers what you are concerned about, especially if you have any specific areas of concern based on the prior owners’ history, the nature of the property, or just due to your basic skeptical nature when it comes to protecting your investments.
Standard policies offer six areas of protection. The Extended policy offers thirty-two for just a 10 percent surcharge. It’s worth the extra cost for this phenomenal coverage. Be sure to specify in your offer who is paying for the ALTA policy. Most offers provide for the seller to pay for a standard owner’s policy.
Even if you pay the 10 percent extended fee surcharge, it is well worth the investment for the sleep you will not lose. This isn’t for every property, rather only for those created by a subdivision or parcel map. Be sure to talk to your agent and/or escrow people to find out if you can get this coverage on the property you are buying.
In this day and age of minimal service for maximum pricing it is nice to experience a business working to be competitive and concerned about protecting their customers.
When it comes to choosing professionals to assist you with your Real Estate needs… Experience is Priceless! Jim Valentine, RE/MAX Realty Affiliates, 775-781-3704. dpwtigers@hotmail.com.