Owner's Title Insurance

[Deleted]

I'm trying to figure out if we should pay for a new owner's title insurance. This is for a refinance. We got owner's title insurance on the land then on the construction. Now, I'm wondering if we need another one for the refinance.

To my understanding the title insurance covers any issues up to the date the insurance was issued. Since we got owner's title insurance last year, I assume those will continue to be valid. Is this right? So, a new one would just cover the last 12-14mos.

I asked for quotes from my mortgage broker. I thought survey issues would be covered. She said no and that I will have to pay extra to have survey coverage. Is this true with yours?

[cosmowife]

I work in commercial real estate, but in my experience, your title insurance is good as long as you own the house. So, new title insurance only needs to be obtained when the owner changes. If anything, your lender will probably want a new lender's policy, which is separate from the owner's policy. You could also request a bring-to-date from your current title insurance company if you really needed to. However, I can't imagine this would be necessary unless you have agreed to any new easements or other agreements on your property since you closed/purchased the initial policy.

[bunch]

In addition to what Cosmo said, some policies don't cover survey issues unless there is an up to date survey at the time of the closing. So if you've had a new one (this is new construct right?) you might need to look into that. I SC the closing attorney is the title insurance agent, so there is no shopping around. Your lender should know if you need a new policy, but I'd doubt it. We didn't when we did our construction second closing.

[Deleted]

Nov 27, 2012 12:21:35 GMT -5 @esquirefish said:

Does the refinancing bank require it? Sometimes evidence of a title policy is required to close.

No.

cosmowife and bnchanums.... What does up to date survey means? 1yo? When we closed on the lot and the construction loan, we had a survey from the land owner (can't remember how old) and a copy of the subdivisions plat.

We had our own survey done after we closed on the construction loan. During the survey, they uncovered a utility easement on the property that was never on previous surveys, on the subdivision plat or on the county's record. We had no problem getting a building permit since they had no record of an easement.

After discussing and agreeing on a solution with the utility company, they agreed to abandon the unused sewer line. I'm not sure if they have updated their records. I think not, because last time someone marked utilities at the site, they marked that abandoned sewer line. So, now I'm thinking it may be good to pay for a new owner's title insurance to deal with any issues with this sewer line in the future. Am I thinking right? The line has been cut.

When we found out the problem, the title insurance company told me to get back with them if we can't agree on anything with the utility company. I assumed they would have dealt with the issue if the utility company did not agree to abandon. Not sure if that's a safe assumption. And can I assume that if this easement comes up in the future that I can contact that title company to deal with it?

I'm just lost on what's covered and what one should expect from a title company when there's a problem in the future.

Any thoughts??

[kadams767]

Nov 27, 2012 13:36:07 GMT -5 d0ri said:

Nov 27, 2012 12:21:35 GMT -5 @esquirefish said:

Does the refinancing bank require it? Sometimes evidence of a title policy is required to close.

No.

cosmowife and bnchanums.... What does up to date survey means? 1yo? When we closed on the lot and the construction loan, we had a survey from the land owner (can't remember how old) and a copy of the subdivisions plat.

We had our own survey done after we closed on the construction loan. During the survey, they uncovered a utility easement on the property that was never on previous surveys, on the subdivision plat or on the county's record. We had no problem getting a building permit since they had no record of an easement.

After discussing and agreeing on a solution with the utility company, they agreed to abandon the unused sewer line. I'm not sure if they have updated their records. I think not, because last time someone marked utilities at the site, they marked that abandoned sewer line. So, now I'm thinking it may be good to pay for a new owner's title insurance to deal with any issues with this sewer line in the future. Am I thinking right? The line has been cut.

When we found out the problem, the title insurance company told me to get back with them if we can't agree on anything with the utility company. I assumed they would have dealt with the issue if the utility company did not agree to abandon. Not sure if that's a safe assumption. And can I assume that if this easement comes up in the future that I can contact that title company to deal with it?

I'm just lost on what's covered and what one should expect from a title company when there's a problem in the future.

Any thoughts??

In your case, an up to date survey would mean an as-built survey, which would depict the house that has now been built on the lot. Regarding title insurance in connection with the survey, in some states survey coverage is done via a separate survey endorsement to your owner's policy. But if it is available, you should be able to add that to your existing owner's policy. A new policy, triggering a new premium, should not be necessary. But that needs to be confirmed with the title company.

Regarding the easement issue, if the utility easement was not discovered until after you had already bound your original owner's policy and had a subsequent survey done, your current policy likely would not provide coverage over that easement. Check your policy, it likely lists an exception to coverage that says something along the lines of "matters affecting title which would be disclosed by an accurate survey". This is pretty standard, I think, and why most people opt for the additional survey endorsement and provide a current survey to be read into the policy. Also, just because the utility company agreed to abandon the line doesn't mean they terminated the easement. In order for it to come off the record (for both title and survey), if it does not have language in the easement itself providing for termination under XYZ circumstances or after XYZ time period, a termination or modification needs to be filed to remove it. Otherwise, it will remain an exception to your title. If the title company asked you to contact them to deal with it, my guess is that they might be willing to offer you affirmative coverage over the easement in the event that the utility company will not remove it. Affirmative coverage is basically the title company insuring you that the easement will not affect the use or enjoyment of your property and that it does not impact the footprint of your construction.