Summer 2021 In Brief Newsletter
by J. Edmund Mullin, Esq., Co-chair, Real Estate and Land Use Department
REALTORS AND BUYERS GET READY!
ATTENTION REALTORS, LAWYERS AND TITLE AGENTS:
Have you advised your buyers on the two kinds of title insurance they may need?
Normally, buyers of residential property purchase what is known as an owner’s policy of title insurance. Also available, for an additional 10% premium, is what is called Homeowner’s Policy of Title Insurance for a 1-to-4 Family Residence (also known as an enhanced policy). It is very important that people involved in the settlement of real estate, including attorneys, realtors, and title agents, advise buyers on the availability of these two different types of title insurance.
Put it in writing!
As you can see, the homeowner’s policy (enhanced coverage) provides much additional coverage over an owner’s policy.
COVERAGE COMPARISON:
| Both Policies Include: | Standard Policy | Enhanced Policy |
| Third party claims an interest in the title | Yes | Yes |
| Improperly executed documents | Yes | Yes |
| Pre-policy forgery, fraud, or duress | Yes | Yes |
| Non-recorded restrictive covenants | Yes | Yes |
| Defective recording of documents | Yes | Yes |
| Prior recorded liens not disclosed in the policy | Yes | Yes |
| Unmarketability of title | Yes | Yes |
| Additional Coverages in Enhanced Policy: | ||
| Mechanics’ Lien coverage | No | Yes |
| Policy insures anyone who inherits the property from you | No | Yes |
| Policy insures a trustee you transfer the property to after policy date | No | Yes |
| Policy insures the beneficiaries of your trust upon your death | No | Yes |
| Automatic increase in coverages up to 150% (no based on inflation) | No | Yes |
| Post policy encroachment onto insured land | No | Yes |
| Legal right to ACTUAL vehicular and pedestrian access | No | Yes |
| Up to $25,000 coverage for certain losses due to building permit violations (subject to deductible) | No | Yes |
| Up to $25,000 coverage for certain losses due to zoning law violations (subject to deductible) | No | Yes |
| Up to $10,000 coverage for certain losses due to existing violation of subdivision law (subject to deductible) | No | Yes |
| Post policy structural damage from third party easement for mineral extraction | No | Yes |
| Violation of restrictive covenants identified in the policy
· Resulting in loss from correction or removal · Resulting in loss of title · Resulting in loss of use where single family dwelling prohibited |
No No No |
Yes Yes Yes |
| Forced removal of existing structures that:
· Encroach onto an easement identified in the policy · Violate a building restriction line identified in the policy · Encroach onto a neighbor’s land (subject to a deductible and maximum if boundary wall or fence) |
No No
No |
Yes Yes
Yes |
| Land cannot be used for single family under zoning ordinance | No | Yes |
You might wonder why it is important to advise the buyer of the availability of both policies but consider what would happen if someone moved into a new home and the zoning officer came by and indicated that their garage was too close to the property line. They would probably call their realtor or attorney and ask whether or not this problem was covered by title insurance. The answer is there would be $25,000 worth of coverage if the individual had the enhanced homeowner’s policy. It would behoove you to have in writing the fact that you explained to the buyer the availability of the two types of policies, and that the buyer elected to purchase the cheaper policy with the additional coverages.
If you don’t have something in writing, you could be held liable for failing to advise the buyer of the availability of the better policy. If you have any questions on this, feel free to contact me (emullin@HRMML.com or (215) 661-0400).
