Enhanced Owner’s Policy of Title Insurance
What is an enhanced homeowner’s title policy and what does it cover? In the past, title insurance may not have covered any matters that occur after the policy effective date. The enhanced policy will now cover certain matters that took place before and after the effective date of the policy; or before and after the closing date. Three items of interest now covered with the enhanced owner’s policy are lien coverage, survey coverage and the homeowner is insured to have vehicular access to the property. Another great feature is that the policy amount will increase by 10% per year for five years up to 150% of the original policy amount.
Below you will find more details of what has been covered in the past and what additional coverage is now in place when an enhanced title policy is issued to the homeowner.
|Title Insurance Coverage:||Basic Owners Policy||Enhanced Homeowner's Policy|
|Some coverage's are subject to deductible amounts and maximums of liability, and may be limited to protection of matters that pertain to the property and structures as they were at the time the policy was issued.|
|Ownership claim outside of the insured||x||x|
|Liens filed of record prior to the policy||x||x|
|Improperly executed or defective recorded instruments||x||x|
|Anyone who inherits the title from the insured||x||x|
|Spouse who received title due to a divorce||x||x|
|Trustee of a Trust whom the insured creates/conveys title to||x||x|
|Beneficiaries of the Trust after the death of the insured||x||x|
|Extended Lien Coverage (call for specific details)||x|
|Building encroachment (except boundary walls/fences)||x|
|Post-Policy ownership claims||x|
|Actual pedestrian access||x|
|Vehicular access over adequate streets or roads||x|
|Protective covenants violation that occurred prior to policy||x|
|Building permit not being issued prior to policy||x|
|Removal of structures that encroach on neighbor's property||x|
|Removal of structures encroaching upon an easement/setback line||x|
|Zoning issues to permit one-to-four family residential homes/condos||x|
|Damages due to Water and Mineral Rights exercised||x|
|Hidden Real Estate Taxes that affect title||x|
|Prior year taxes not previously assessed because of construction||x|
|Prior year taxes not previously assessed because of an ownership change||x|
|Automatic Survey Coverage||x|
|Policy amount increases 10% per year up to 150% of original policy amount||x|
|Pays rent/expenses if you cannot live in your home due to a claim||x|
|Unauthorized Leases, Contracts for Lease/Purchase Options||x|
What property can qualify for the enhanced homeowner’s coverage? The one to four family residential dwelling or condominium unit must be located in a platted subdivision or contain less than 25 acres. The owner/insured must be either natural persons or owner trustees who reside or intend to reside upon the real property. This type of policy is not intended to insure title to a commercial property.
Why would a homebuyer want an enhanced homeowner’s policy? In today’s climate, there are many properties that are involved in bank owned sales, foreclosures, bankruptcy sales, short sales, auction, traditional seller transactions, for sale by owner sales, etc. The homeowner will want to be insured against any loss after closing that might be the result of a later finding that might include foreclosures that contained defective instruments, false documentation, or improper foreclosure actions. Other concerns may be: does the seller have all of the rights to sell, is the seller the true and rightful seller, did the seller even hold good title? Title Insurance will protect the homeowner from risks and defects to the title of a property. If needed, the owner could file a claim against the title insurance if the owner felt there was a loss due to a problem that is covered by the title insurance. The claim could cover costs incurred such as attorney fees, court fees, survey work, or other means to defend the title or claim.
We at WACO Title Company carefully research the property back to patent so that we can examine the complete title and all of the transfers that have taken place to produce a title commitment; a commitment to insure the proposed owner and/or proposed lender. The title commitment will disclose any matters that are filed of record that encumber the real estate to be insured. Within the title commitment, we will list the requirements that are necessary to be satisfied before a policy may be issued. In addition, we will reflect how the insured, or buyer, will take title and will be insured. If there is a lender, the title commitment for a lender policy will reflect the lender to be insured and the amount of both policies. The legal description of the property to be insured is disclosed and the exceptions to the title policy will also be disclosed on the commitment. A careful search is performed by using the records within our in-house title plant, courthouse records, federal court records, and bankruptcy records so that we may review any and all matters that may have surfaced such as judgments, bankruptcies, probate, surveys, divorces, liens, and taxes.
Typically, a lender will require a policy of title insurance to protect the lender interest and that their mortgage is in first lien position. An enhanced homeowner’s title policy may be simultaneously issued at a reduced price known as a combo policy rate. The title premium can be discounted if the owner can provide a copy of the previously issued owner policy (does not have to be issued by WACO Title to receive full discount) to WACO Title along with the order for title insurance and closing needs. Although the lender policy is only good for the time the mortgage is in effect, the enhanced homeowner’s policy will stay in effect for as long as the owner owns the property. Coverage can be extended to include the insured’s trust or heirs at law. Therefore, if the owner refinances their mortgage, the lender may require a new policy to insure the new mortgage. More information may be obtained about the title insurance products by calling our offices. We welcome your questions and of course we welcome your business so that we can protect your interest in one of the biggest investments you will make.