Texas tradition dictates that sellers typically pay the title insurance premium at a real estate closing. It is the seller, after all, who warrants that the title is free and clear of title problems; it makes sense that such a warranty is backed up by a title insurance underwriter with the resources to cover a claim if a problem arises.
In addition, commercial closings typically include an extra level of coverage, whereby, in addition to covering claims based on document filings at the courthouse, the title policy covers survey issues as well. Due to the large value of many homes in today’s economy, this additional coverage is increasingly gaining favor in the residential market.
Why is the survey coverage important? Let us count the ways:
- It makes your title search more thorough.
When researching title, title companies can only “see” what’s been filed in the property records of the county in which the property is located. Typically, the title company has not conducted a site visit and has no way of knowing if a title problem has arisen by virtue of the physical placement of improvements on the property. Issues such as fence and driveway encroachments, protrusions over the setback line and easement issues can only be ascertained by studying a survey of the property by a qualified land surveyor.
- It eliminates loopholes.
Without the additional coverage, an affected landowner would have to pursue a suit against a survey company to make restitution for their oversight. Even worse, with many buyers opting to rely on existing surveys rather than a new survey, a buyer would have no legal “privity of contract” to sue the surveyor, who prepared the survey for a former transaction but not the current one.
- It is a small fee to save you from a large headache.
If a survey is obtained and the title company reviews and accepts, an additional 5% premium is paid on the residential transaction. This small 5% fee, typically paid by the buyer, can save you a lot of time and money down the road in the event of a dispute.
At the end of the day, the extra survey coverage is not mandatory; however, buyers can rest assured that they have adequate coverage for one of the biggest investment of their lives.
Content derived from Jeffrey A. Rattikin, Attorney at Law, RattikinLaw Fort Worth, www.rattikinlaw.com. Copyright 2017, All Rights Reserved. This Title Tuesday tip is not a legal representation or statement of law, but is presented for general informational purposes only. Please confer with legal counsel of your choice for any and all legal questions.