Title insurance helps protect property owners and lenders, but it has some limits. While title insurance covers many risks, there are certain situations and problems that a standard policy won't cover. This guide will help you understand what title insurance does not cover and answer common questions about it.
Title insurance does not cover problems that come up after the policy is issued, and it also does not cover known issues or physical problems with the property.
Title insurance covers issues that existed before you bought the property, found during the title search. It won't cover problems that come up after you get the policy, like new liens or defects that happen after purchase.
If you already know about a problem when you buy the property, title insurance won't cover it. A title company will not cover defects known at the time of purchase.
Title insurance doesn't cover environmental risks, even if they existed before you bought the property. Examples include:
If you find out your property is contaminated after buying it, title insurance will not pay for it.
Title insurance doesn't cover building code or zoning violations that happen after you get the policy. If you make changes that don't follow local rules, title insurance won't cover the costs to fix them.
Title insurance won't cover physical defects, like:
If you, as the owner, cause a problem, title insurance won't cover it. For example, making changes that break zoning rules won't be covered.
Title insurance won't cover:
Title insurance usually won't cover:
Title insurance doesn't cover:
If an unknown heir comes forward after you buy the property, they may challenge ownership. Title insurance may provide some protection, but not always full coverage.
Title insurance may cover fraud or forgery discovered at purchase, but it won't cover fraud that happens after you get the policy unless you have an enhanced policy.
Title insurance doesn't cover physical defects, environmental hazards, and known issues that come up after the policy is issued.
No, title insurance does not cover environmental risks like soil contamination. You need special environmental insurance for that.
No, title insurance won't cover zoning or building code problems, especially if they happen after you get the policy.
You can:
Common exclusions include issues after the policy is issued, known defects, government actions, environmental hazards, and physical problems.
No, title insurance doesn't cover problems with wells or septic systems. Make sure to inspect these before buying.
Title insurance doesn't cover boundary disputes that happen after you buy the property, though some policies may offer limited coverage.
If an unknown heir comes forward, title insurance may provide limited protection. It's best to consult a real estate lawyer.
No, title insurance doesn't cover disputes over mineral or water rights.
Title insurance protects against ownership issues, not physical defects like structural problems or poor construction.
Coverage can vary between policies and insurers. Some title companies offer extra coverage to protect against risks usually excluded.
To protect yourself:
Title insurance helps protect both property owners and lenders from title issues that could affect ownership. There are different types of title insurance, like owner's and lender's policies, which cover different interests in the property.
Check if there are restrictive covenants, unpaid taxes, or other problems that could affect your rights but may not be covered by title insurance. The type of title insurance you choose will affect how well you are protected.
In many cases, the title insurance company will help resolve title issues, but it's important to know the limits. Title insurance is an essential part of buying real estate, making sure liens or claims from previous owners don't affect your rights.
Title insurance is important for protecting your real estate investment, but it has limits. By understanding these limits and taking steps to protect yourself, you can avoid surprises and keep your property safe from unexpected problems.
RYAN LIPSEY TEAM