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7 Important Reasons to Choose an Enhanced Title Insurance Policy

Monday, June 21, 2021

Buying a home is exciting, and with the downpayment and other closing costs, it's also a major expense. If you're settling into a new home, the last thing you want is someone telling you it's not your home! 

Did you know you could lose your home if someone else has a legitimate claim to ownership after you buy it? Some people even lose their homes to phishing scams and other forgeries. Sounds scary, right?

Don't change your mind about buying a home yet!

Keep reading for seven important reasons to choose an enhanced title insurance policy. 

What Is Title Insurance?

Title insurance is an indemnity policy protecting the buyer from an unexpected problem with the home's title. 

The lender requires title insurance to protect his investment in your loan. Basic title insurance also protects you against some problems, but don't assume it protects you against all title-related issues.

basic title insurance policy is one of the most important things to buy when closing on your home. A standard policy protects against a handful of common title problems. These include, but are not limited to:

  • Someone else comes forward with an interest in your title
  • Fraud, forgery, or duress in the chain of title
  • Documents not signed correctly
  • Improper document recording
  • Restrictive covenants
  • Some types of liens

Unfortunately, there are more title issues than those covered under a standard title insurance policy. 

As a buyer, you can go a step further and get enhanced title insurance to make sure you're well protected against unexpected claims to your home. There are many reasons to opt for an enhanced policy. 

1. Forced Removal of Structure

There are several reasons someone can force you to remove part of a structure on your land. Sometimes part of a home or fence encroaches on an easement or the neighbor's land. 

Imagine you bought your place only to find out the back bedroom extends over onto the neighbor's land by several inches? Many people mistakenly believe that if the house is there and has been there for a while, it's "grandfathered" in.

That's rarely the case. The other owner can force you to remove whatever part of your home, fence, shed, or other structure encroaches on his land. That means you'll bear the burden of any costs. 

An enhanced title insurance policy helps with these unexpected costs. 

2. Mechanic's Lien

If the previous owner of your home failed to pay a contractor or subcontractor on a job related to the property, there could be a lien against your property. The contractor files a lien in the dollar amount of services, labor, and materials used at the property that remain unpaid. 

Liens are public but sometimes missed during a title search. If you find out there's a lien against your home, an enhanced policy covers the costs. 

3. Building Permit Violations

Did you discover some construction you didn't know about when you bought the home? It could be something like a sunroom addition that you thought was original to the house. Was a permit required but not obtained by the owners who made the changes?

If you discover construction that wasn't original to the house, check to see if there are permits on file with the city. If not, that could present a costly problem when you decide to sell. Many enhanced policies help cover those costs. 

4. Zoning Issues

After moving into your home, you could find that a structure on your property violates a local zoning ordinance. Remember that beautiful fence that was the deciding factor in buying your home? Now you've got a letter from the city informing you the fence violates an ordinance and you must change or remove it. 

That's an expensive fix! If you've got an enhanced title policy, you won't be on the hook for all the costs. 

In some cases, new homeowners even find they're violating zoning laws by living in the home as a residence! This is another covered expense with an enhanced policy. 

5. Enhanced Marketability

An enhanced title insurance policy makes your home more marketable in the future. That's because there's peace of mind about title ownership and issues such as the above-mentioned zoning problem. The policy insures you as a buyer and a seller. 

6. Post-Policy Forgery Protection

Some experienced thieves forge a signature on a land deed or mortgage and also manage to record it in the land records. This can even happen after you've bought your home. It's alarming to think of someone stealing your house out from under you!

Although not common, it's nice to know you've got protection if it does happen. Enhanced title insurance protects you against post-policy forgeries. 

7. Mineral Extraction Protection

Sometimes you end up with problems on your property from something someone does on their property. Some property owners mine minerals or extract water on their property. These types of activities don't always adhere to property lines.

One possible result of these activities is damage to a structure on your property due to destabilization from digging. There could be issues with third-party easements due to mineral extraction as well. An enhanced policy helps cover the cost of structural repairs. 

Cost vs Protection

Title insurance cost varies, and an enhanced policy does cost more than a standard policy. It's not a huge difference compared to what it can save you.

Enhanced policies also protect against inflation and come with an automatic increase in the original policy amount. This protects you as your property increases in value. 

Always check deductibles and maximum limits on your policy. 

The Benefits of Enhanced Title Insurance

There are many benefits to opting for an enhanced title insurance policy when you buy a home and property. If you're buying a home, weigh the costs and the risks to determine whether an enhanced policy is right for your situation. 

Are you ready for the peace of mind an enhanced title insurance policy offers? Contact us for more information, and we'd be happy to help!

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