Title endorsements: What they are and when you need them

Key takeaways:

• Title endorsements are changes to the insurance contract to provide additional coverage.
• The most common types of endorsements are typically for things like easements and survey coverage. What’s needed depends on the property.
• You can speak to your lender and title company to get an idea of the types of coverage they suggest.

When you buy a home, you gain a series of rights to use the property that collectively make up a house title. Title insurance protects the policyholder if issues come up after the transaction closes, including details like easements. In total endorsement is any modification of the title policy, meant to provide additional coverage.

What is a title endorsement?

A title endorsement is a change in the language of a standard title insurance policy in order to provide coverage that would ordinarily be subject to an exclusion or exception. There are around 100 endorsements meant to provide tailored property coverage for the unique situations that come up often in real estate.

How much is the title endorsement fee?

Fees for title endorsement vary quite widely. In some instances, the fees are regulated by states. In other cases, the fee is at the discretion of the title company. Some endorsements may be free, while others could be several hundred dollars or a percentage of the loan amount.

The American Land Title Association is a trade group of title insurance providers. In many cases, the recommendations of the industry are followed when it comes to the types of endorsements available and the fees involved. But federal law leaves insurance regulation to the states.

Types of title endorsements

Lender title policies protect the investment the lender has made in your property while an owner’s title policy will cover the homeowner if they lose their home. While there are about 100 endorsements for title based on need, they tend to fall into one of several groups. Let’s look at each of the categories at a high level.

Easements and encroachments

Easements give someone else the right to access your property for a specific purpose. For example, utility workers can usually access your property to read meters and maintain equipment. Encroachments occur when a neighbor builds something on their property that extends onto your own.

An easement endorsement would cover you if you had to remove a feature of your property to comply with amazement. An encroachment endorsement would make sense if there was the possibility of having to remove a structure that extended onto your neighbor’s land.

Minerals and subsurface substances

Occasionally someone else owns mineral rights to extract valuable materials from the land on which your home sits. A mineral and subsurface substance endorsement protects you if your property is damaged or removed in the course of this mining activity.

Survey coverage

A professional land survey gives a homeowner and the lender an analysis of the size, boundaries, and features of the land being purchased. A survey endorsement is protection against mistakes that might be made in that survey. For example, if some land is later identified as belonging to the city, it could cause problems when selling.

Access and entry

To enjoy your property – and often as a requirement of financing it, you have to be able to access it year-round. This means you have to be able to get from the property to a public road. If you can’t, you may need an easement by necessity. If public access were found to be unavailable, an endorsement could cover you.

Zoning

Local zoning restrictions from the authorities impact what you can do with your property. For example, you commonly can’t run a business out of a residential area. This protects you if a court order resulting from an original zoning misunderstanding causes the removal or modification of your property. It can also cover more technical aspects like how far the home is from the road.

Contiguity

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 irregularly shaped parcels separating them.

Covenants, conditions, and restrictions (CC&Rs)

Common in condo and homeowners associations (HOAs), CC&Rs are restrictive covenants that dictate everything from the paint color on your trim to the side of your hedges and whether you are allowed to have a porch swing. If you’re forced to remove a feature of your property due to a newly enforced regulation, this endorsement covers it.

Environmental protection lien

An environmental protection lien endorsement covers you in the event that your property needs to be modified or taken down as part of a hazardous waste cleanup or a lien is placed on your house to make you pay for decontamination. Having the endorsement is a shield from responsibility for future environmental issues.

Future advances

When you buy a home with a mortgage, your home is collateral for the lender if you default on your payments. But lenders have a vested interest in knowing about any additional loans that you get on the property because whether they are primary or secondary lien determines who gets paid first in a sale.

Having this endorsement can cover the losses if they get caught secondary to a lien they didn’t know about.

Who needs a title insurance endorsement?

When buying a home with a mortgage, you have to purchase a lender’s title policy. As part of this, the lender may add some things to protect their investment, so they may add the future advances and survey endorsements. You can speak with your lender and title company as well to get an idea of what they recommend.

You’re not required to purchase an owner’s title policy, but it’s generally a good idea to protect your interests in case there of future claims to your home or other title issues that aren’t found before you take possession. The survey endorsement is fairly common. Other endorsements are going to depend on the pro

The bottom line: Title endorsements offer additional property protection

Title endorsements are modifications to the existing language in title insurance policies that offer additional protection for lenders and buyers beyond typical coverage. Common endorsements include one to make sure that you’re covered in the event of survey mistakes and one to deal with encroachments and easements.

If you’re feeling more confident, apply with Rocket Mortgage^® to finance the home you love.