Risks That Real Estate Title Insurance Policies Usually Won’t Cover By Bob Miles At Isnare.com Ezine Articles

When you purchase real estate, you will almost certainly need to take out a title insurance policy covering you against the risk of unrecorded defects in your title. Following is a list of some of the risks that almost no title insurance company will cover:

1. There is a defect in the title to the property that you purchase, and although it is unrecorded (and thus would normally be covered), you knew about it before the closing of the sale.

2. The property was given to you as a gift.

3. Problems that are not likely to be recorded but can be discovered by inspection of the property

Examples include boundary disputes and unrecorded title claims made by someone other than the owner who is in actual possession of the property. A title insurance company may be willing to insure you against such risks, but if so it will certainly charge you a higher premium because it will have to send someone out there to inspect the property. In this case, unless the property is far away from where you are, you might as well do it yourself and save the extra expense.

4. Governmental restrictions on property

Suppose you buy property intending to develop it into a shopping mall only to discover after closing that it has been zoned for residential use only. Or suppose that before the closing the government exercised its power of eminent domain to confiscate the property for a public park or a highway (paying the seller market value, of course), and the seller sold it to you before the government actually took possession of the property. Don’t come running to the title insurance company over this one – you’ll have to try to get to the seller before he spends all his money. Another possibility would be environmental regulations that require you to clean up a mess made by the previous owner.

DISCLAIMER: The following is provided only for reference and does not constitute legal advice.

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