Title Endorsements: What They Are And Why You Need Them
Lauren Nowacki4-minute read
February 21, 2023
A title confirms that you legally own your property. When you sell your home, the title shows the buyer that you have the legal right to sell it. When you purchase a home, the title transfers to your name, giving you the legal right to own and, eventually, sell the home. But sometimes, there can be an issue with the title that may not come up right away. To help protect the homeowner and lender’s investment, title insurance is there to help cover damages or losses from certain claims filed against the title.
A title endorsement takes protection a step further. Wondering if you should get a title endorsement? Read on to learn more about what it is, what it covers and when it may be best to get it.
What Is A Title Endorsement?
Title endorsements provide coverage beyond a home buyer’s standard title insurance policy. With nearly 100 title endorsements fit for every home buyer’s nightmare, selecting the right endorsement can prevent costly expenses and even the loss of your home.
Title insurance endorsements add additional protection by modifying some exceptions or adding property-specific coverage to the current policy. A title endorsement fee typically costs up to $75, on average, though some may cost more. However, the cost will depend on the underwriter and the state in which the sale is taking place. While states have some of their own unique requirements – like cost – it is the American Land Title Association (ALTA) that regulates and sets national endorsement guidelines for the different types of endorsements.
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Types Of Title Endorsements
There are close to 100 types of real estate title endorsements available to homeowners and lenders. You don’t need to add all endorsements; you can pick and choose them to custom fit the coverage to your specific property and situation. Some endorsements are offered to both owner’s and loan policy, some are not. The lender may purchase some endorsements or require you to purchase some endorsements. Or, you may choose to purchase some on your own. Below are a few common title endorsements to consider.
Easements And Encroachments
Endorsements for easements and encroachments protect against loss and damage if there is an encroachment or easement violation that results in the removal or alteration of the homeowner’s property. For example, if the homeowner must tear down a fence that crosses into the neighbor’s yard because the new neighbor demands it be removed, an encroachment endorsement will cover the loss.
Minerals And Subsurface Substances
This type of endorsement covers damage or loss if the home must be altered or removed because an existing right allows an entity to use the land for the extraction or development of certain minerals or other substances. For example, if someone owns the minerals under your land and that mineral owner wants to extract, say, oil from your property, this endorsement will cover the loss or damage incurred from the extraction practices.
Survey coverage protects the property when there is a discrepancy between the endorsement and policy when identifying the land that’s insured. It covers the homeowner or lender if the land identified and insured in the insurance policy is not the same land identified on the survey in the endorsement.
Access And Entry
The access and entry endorsement helps ensure the homeowner has direct or indirect access to a public street and protects against loss or damage if they do not. This can happen when the property doesn’t border a public road, and access to that road typically depends on an easement by necessity to use a neighboring property to get to the road.
A zoning endorsement helps protect from loss or damage caused by a court ordering the homeowner to alter or remove the home or prohibiting them from using the home for a specific purpose because it violates a specific zoning law.
The contiguity endorsement is common for insured land that contains multiple parcels that make up one property. This type of endorsement ensures there are no other parcels or gaps that intervene and cause the insured parcels to become detached from one another. It covers any loss that occurs when the insured parcels are not adjoining – or touching one another – because there are other parcels, gaps or gores separating them.
Who Needs A Title Insurance Endorsement?
Most title insurance policies will cover many common needs. However, some properties – due to their location or their features – may require additional coverage. The additional coverage needed will depend on the property. To help you gain insight on the types of endorsements you should get, take a cue from your lender. The lender will most likely have more of a stake in the property in the beginning – depending on how much you borrow – so it’ll want to protect its investment. Whatever endorsements your lender gets, you may want to consider getting the homeowner version. Many title endorsements are available to both the lender and homeowner.
While following the lender’s lead is helpful, the best way to be sure you’re getting the right endorsements for your property is to consult with an attorney or contact the title company directly.
The Bottom Line
Title endorsements add additional protections against loss or damage to a property under special circumstances. With close to 100 endorsements to choose from – and help from an attorney or title company – a homeowner can build a protection plan that’s more custom fit to their unique home.
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