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What Are Title Insurance Endorsements?

Wednesday, December 30, 2020

Global pandemic or not home sales are making records month after month in 2020. In fact, in August alone existing home sales hit a 14-year high. With the competitive market, homebuyers often need to act quickly to land the house of their dreams. 

If you're in the home buying market, it's important to understand as much about the process as possible ahead of time, so when you need to make those quick decisions, you feel confident in what you're doing. 

It's necessary to understand why you get title insurance and whether you should consider adding title insurance endorsements. Read on to learn what you need to know about title insurance endorsements.

What Is Title Insurance?

When you purchase a home, you're given the property's deed. This is the legally binding document that says person A no longer owns the property. Person B now does own the property. The deed describes the property so it is legally identifiable. 

Before this can happen the title must be cleared. When you get a mortgage, you work with the title company that is responsible for the transferring of property from one owner to the other. 

The title insurance checks the title to make sure it is a clear title and can be transferred. It will check to make sure there are not things like outstanding mortgages on the property. It will make sure the taxes, water bill and utilities are paid. If there is a homeowner's association, the title insurance will make sure the dues are paid in full.

What Are Title Insurance Endorsements?

When you purchase title insurance, you might want to consider whether to purchase title insurance endorsements. Title insurance does one of two things. 

  1. The title insurance endorsement might take away exceptions from the previous title insurance so more things are checked
  2. The title insurance endorsement might add coverage so more things related to the title get cleared

Title endorsements get added to regular title insurance as they need arises for unusual title situations. 

When Should You Purchase Title Insurance Endorsements?

There are many reasons why you might consider purchasing title insurance endorsements. Depending on the state where you are purchasing, there can be up to 100 different kinds of endorsements. 

The most common endorsements include:

  • Condominium
  • Mechanics
  • Planned unit development
  • Environmental protection
  • Restrictions, encroachments, minerals
  • Reverse mortgages
  • Stand-alone second mortgages

The American Land Title Association (ALTA) is the organization that sets guidelines and standards for endorsements. Understanding whether you need a title insurance endorsement will depend on the loan type, property type, property location
and other variables of the property. 

An experienced real estate agent and mortgage broker can help guide you with the title company to understand the specific needs based on the property. 

Understanding Title Insurance Endorsements

 In the process of buying  a home, title insurance endorsements can help avoid problems or surprises later on with the property. You may not need them. But if the property is unique in some way, or there are concerns related to the development or renovations to the property, it makes sense to get them. 

If you have questions about title insurance and whether you need title insurance endorsements, we can help. Contact us today to get more information about the title for your property.

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