TITLE INSURANCE

Title Insurance insures that you will be the title owner of the property and that no one will come forward with a better claim to the property than the claim that you have. 

Why is there Owner’s Title & Lender’s Title?

Lender’s Title Insurance protects the lender’s interest in the property to the extent of the loan amount.  Lenders always require title insurance, it is not optional.  As the loan is paid down, the amount of the coverage under the Lender’s Title Insurance decreases accordingly and when the loan is paid off, the Lender’s Title Insurance policy terminates. 

Owner’s Title Insurance protects the owner’s title to the property.  So, money the owner pays down on the property at the time it is purchased (the down payment), and equity that the owner earns over the course of the years either by paying down the loan, making improvements to the property, or increases in market value are covered.  Owner’s Title Insurance is “optional” but I would never buy a property without it!

Why Should I get Owner’s Title Insurance?

Title issues occur more often than one might think.  There was a survey taken in Georgia several years ago that determined 1 in 3 titles in Georgia have a problem and, in reality, that bears out with what we see in our practice. 

There are two types of Owner’s Title Insurance policies: Standard and Enhanced. 

The major benefits of an enhanced policy over a standard policy include:

  • A standard policy only covers up to the sales price of the property, whereas an enhanced policy covers 150% of the sales price.  This means that future increases in the value of the property are covered up to that amount.;

  • A standard policy only covers issues that were caused by circumstances that arose prior to the purchase of the property, whereas an enhanced policy covers circumstances that arise after the purchase of the property.  For example, let’s suppose that a couple of years after you purchase the property a neighbor builds a fence that encroaches on your property, you don’t realize it, and then five years later you go to sell the property and the buyer does a survey and finds the encroachment … under a standard policy this would not be covered, but with the enhanced policy. you are covered; and

  • A standard policy does not cover matters that would be shown on a survey of the property but an enhanced policy does.  In the past, surveys were always required and done when real estate was sold or encumbered.  Approximately two decades ago that stopped being a requirement and, today, surveys are rarely performed prior to the purchase. 

So, whereas in the past, title issues associated with encroachments or boundary line disputes were identified at the time of the sale, today, that is not the case and you may have a title issue of this sort without even knowing it.  If and when this issue rears it’s ugly head, if you don’t have title insurance or only have a standard policy, it will be your money and your problem to fix it (if it even can be fixed).  If you have an enhanced policy, you are covered and your equity preserved.

Provided by Eric Slepian of Slepian & Schwartz in Peachtree City
(770) 486-1220, ericslepian@slepianfirm.com

Overview - STANDARD vs ENHANCED TITLE INSURANCE

Standard Title Insurance

Standard title insurance protects the property owner from any problems with the title leading up to and on the date of the recordation of the Deed. Any problems that occur after the date of recordation of the Deed are not covered by the title insurance policy. With a basic or standard owner’s title insurance policy, the homeowner is covered in the following cases: 

  • Third-party claims to the title of the property.

  • Mistakes in the public record.

  • Any forgery, fraud, or duress.

  • Unmarketability of the title.

  • Previously recorded liens not disclosed during time of policy purchase.

  • Non-recorded restrictive covenants.

Enhanced Title Insurance

With enhanced title insurance the property owner receives the coverages found in the basic title insurance policy along with many additional coverages. These can include problems that occur after the recordation of the Deed as well as increases in coverage due to the increased value of the property. With enhanced owner’s title insurance, the property owner is covered in these cases:

  • Insures any inheritors of the property.

  • Forgery or fraud after Deed recordation.

  • Encroachments after the policy take effect.

  • Zoning and building permit issues.

  • Lack of access to the property—pedestrian and vehicular.

  • Subdivision violations.