Top 5 Questions to Ask About Title Insurance
By Elizabeth Dougherty
Many of us have been enamored by stories of
people picking up homes for pennies on the
dollar at tax and foreclosure sales. What you
don't know about the process, though, is that
title problems can cost you some, if not all, of
your profits. In fact, if you're not careful, you
could lose everything you paid for the property.
Even in an all-cash residential sale, a good title
search is worth its weight in gold before you
purchase. After the fact, a good title policy is
even better. Here are the top 5 questions to ask
about title insurance coverage:
1 Am I getting standard or enhanced coverage?
While most policies cover problems discovered
before you took title, what is covered AFTER
you take title? As an example, what if an
unrecorded easement is discovered? That
may means some other person can build a
driveway, for instance, straight through your
property to get to his or her piece of land. Also,
utility companies typically have easements
on residential property. If you build a fence to
surround your pool and it crosses an unknown
utility easement, who pays for restoring the
fence if the utility company needs to tear it
down?
2 Is an ALTA 9 endorsement included in my policy?
This is an American Land Title Association
endorsement to your policy that covers any
current violations of the covenants and
restrictions in your neighborhood. If you are
going to live in a subdivision where there is
a homeowners' association involved, this is
a good endorsement to have on your policy.
It also covers mineral rights issues and
encroachments.
3 Is an ALTA 8.1 endorsement included?
This endorsement protects your lender from any
state statutes that might be in existence that
could cause an environmental lien to be placed
on your property for hazardous waste spills and
other environmental mishaps. Environmental
liens, also known as "super liens", will take
precedence over any other liens on the
property, including your mortgage.
4 Is there a survey endorsement?
This endorsement gives you (as an owner)
assurance that the land described on your
policy is identical to the finished survey that
will be attached and made a part of your policy.
5 What about zoning issues?
An ALTA 3.1 endorsement will describe
the particular zoning classification for your
property and cover your improvements (the
house, etc.) should a court order require tearing
down of any structures on the property due to
zoning violations.
In today's litigious world, enhanced coverage
should provide you with all you need for piece
of mind before and after closing on your new
home. While all of this information may sound
confusing, there are many title attorneys here
in Lee County that will sit down with you
and explain the finer points of title insurance.
Even if you are paying cash for your home, it's
important to have title coverage. Don't close
without it.
Elizabeth Dougherty, a resident of
Auburn, is a former Real Estate Broker
and Mortage Broker. She can be
reached at EADougherty1@aol.com.
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