When you purchase a piece of real estate, your title company will perform a title search to ensure that the property you are buying has a clear title without any encumbrances. And, just to be sure that nothing was missed, they will offer you a title insurance policy.
While title insurance protects a lot, it does not protect against everything. Let’s take a look at the 5 things title insurance does not cover.
1. Mold or Mildew Issues
Mold issues are quite commonly found during home inspections. However, in the event that it is not, you should know that it will not be covered by your title insurance. If you did not purchase any special policy regarding mold coverage, having it safely removed becomes your responsibility.
2. Unpermitted Work
If construction was done on your new home by the previous homeowner - and a permit was not obtained - it may not be covered by your title insurance policy. If unpermitted work is something you are concerned about, there may be enhanced title policies that will offer protection. Be sure to speak to your title agent.
3. Natural Disasters
Fire and certain weather-related disasters can leave you with extensive property damage. But these things don’t impact the title to the property - and are therefore not covered by title insurance.
4. Unwanted Pests
When you bought your new home, you didn’t intend to have to share it with a bunch of pests. Though, it can happen. Infestations are often caught during home inspections, but not always. Some pests like termites can cause the property to deteriorate after the closing.
Unwanted pests are not covered by your title insurance policy.
5. Defects After Your Purchase
Title insurance is meant to cover things that happened in the past - before you took ownership of the property. Although you may not know about these title issues until years down the road, they initially happened before the title was transferred to you.
Your new title insurance policy will not cover any defects that impact the title after you took ownership. Let’s look at an example.
If there is a judgment attached to the property in the prior owner’s name, it would impact the title before you took ownership. Typically this would have been found in the title search - unless it was erroneously recorded.
If this judgment were to arise years after you became the owner, it would most likely be covered by your title insurance policy.
If the judgment is in your name and was recorded and attached to the property after you became the owner, your title insurance policy would not cover it.
What Title Insurance Does Cover
Despite the things mentioned above, investing in title insurance is always a good idea as it can offer you a lot of protection. For instance, an owner’s title insurance policy will often cover items that may have been missed in the title search, such as:
Fraudulent/forged deeds
Judgments
Easements
Outstanding lawsuits
Liens
Outstanding taxes
Encroachments
Erroneously recorded documents
For a one-time premium paid at closing, this policy will remain in effect for as long as you or your heirs have an interest in the property.
Understand Your Title Insurance Policy
Your title company is there to answer any questions you may have about the process - including questions concerning what your title insurance policy will and will not cover. They will also be able to advise you of any additional coverage or types of title insurance that may be of interest to you.
The title experts at Blue Pointe Title Agency are here for you. Contact us today at 517-258-1511 to learn more about title insurance.
Comments