Have you ever heard about title insurance covering unknown encroachments? Well, if you’re someone who is about to purchase a real estate property, it’s vital to understand the concept of title insurance, including what it covers and what it doesn’t. Title insurance is a form of indemnity insurance that protects you if any defects or claims from someone else arise related to the title of your property. But when it comes to unknown encroachments, it can get a bit tricky.
When a property is purchased, the title company performs a title search to identify any potential issues, including encroachments. However, some unknown encroachments may not appear in the search, and that’s where title insurance comes into play. But does it cover all kinds of encroachments, including unknown ones? Well, that’s what we’re here to discuss. In this article, we’ll uncover the ins and outs of title insurance and help you understand if it’s enough to protect you from any liabilities if an encroachment issue pops up in the future. So, let’s dive in!
What is Title Insurance?
Title insurance is a type of insurance that protects homeowners or lenders from financial loss in case of any defects or issues with the legal ownership of the property. It provides coverage for various risks that may arise with ownership of a property, such as unknown encroachments, unknown liens or mortgages, undisclosed easements, and other title defects that may have been previously unknown.
Types of Title Insurance
When purchasing a property, many people may not fully understand the importance of title insurance. However, title insurance is a crucial component of the home buying process as it protects buyers in the event that there are any issues with the property’s title. There are two types of title insurance: lender’s title insurance and owner’s title insurance.
- Lender’s Title Insurance: This type of insurance is required by most lenders and protects the lender’s investment in the property. In the event that there is an issue with the property’s title that affects the lender’s investment, this insurance will provide coverage for the lender.
- Owner’s Title Insurance: This type of insurance is optional but highly recommended for the buyer. Owner’s title insurance protects the buyer’s investment in the property and provides coverage for any issues with the title that may arise in the future.
One of the most valuable aspects of owner’s title insurance is that it provides coverage for unknown encroachments on the property. An encroachment is when a neighbor or third party unlawfully uses a portion of your property or builds a structure on it without your permission. This can lead to disputes and even legal action if not resolved properly. With owner’s title insurance, the buyer is protected against unknown encroachments that are discovered after the purchase of the property.
It’s important to note that while title insurance provides coverage for many types of issues with a property’s title, it does not provide coverage for everything. Some issues that are typically not covered include zoning violations, environmental hazards, and issues that arise after the purchase of the property. It’s important to review the title insurance policy carefully to ensure that you fully understand the coverage that is provided.
Wrapping Up
When it comes to protecting your investment in a property, title insurance is an essential aspect of the home buying process. Knowing the difference between lender’s title insurance and owner’s title insurance can help you make an informed decision about which type of insurance is right for you. By investing in owner’s title insurance, you can ensure that you are protected against unknown encroachments and other issues that may arise with the property’s title.
| Lender’s Title Insurance | Owner’s Title Insurance |
|---|---|
| Required by most lenders | Optional but highly recommended for the buyer |
| Protects the lender’s investment in the property | Protects the buyer’s investment in the property |
| Provides coverage for issues that affect the lender’s investment | Provides coverage for unknown encroachments and other issues that may arise with the property’s title |
By understanding the importance of title insurance and the different types of coverage available, you can help ensure that your investment in a property is fully protected.
What does title insurance cover?
When purchasing a property, getting title insurance is essential. It protects you, the buyer, from any future claims against the title of the property. But what exactly does title insurance cover? Here are the main things that title insurance covers:
- Unknown liens or encumbrances on the property that were not found during the title search process
- Errors or mistakes made during the title search or recording process
- Fraud or forgery that affects the title to the property
- Unknown title defects, such as undisclosed heirs or incorrect property descriptions
- Boundary and survey disputes that arise after the purchase of the property
- Any existing violations of building codes or zoning ordinances that affect the property
Does title insurance cover unknown encroachments?
One question that comes up frequently is whether title insurance covers unknown encroachments. An encroachment is when a neighbor’s property, such as a fence or structure, extends onto your property. Although the existence of encroachments can be discovered during a survey, there are instances where they are unknown during the purchase of the property.
Unfortunately, title insurance does not typically cover unknown encroachments. However, there are some policies that may offer limited coverage for certain types of encroachments. For example, some policies may cover encroachments that were caused by a previous owner’s actions but unknown to the current owner at the time of purchase. It’s important to consult with your title insurance company to understand the specific coverage included in your policy.
Limitations of Title Insurance
While title insurance can be a valuable tool for protecting a homeowner or investor against unforeseen issues with a property’s title, it is important to understand its limitations. Below are some of the key limitations of title insurance:
- Title insurance only covers issues that were already recorded at the time of the policy’s issuance. It does not cover any title defects that arise after the policy is issued.
- Title insurance policies typically do not cover issues related to zoning, land use, or environmental hazards.
- Title insurance policies also typically exclude issues related to mineral rights, water rights, and other non-title-related issues that may affect the property.
It is important to carefully review the terms and limitations of a title insurance policy before purchasing it to ensure that you fully understand what it does and does not cover.
Exceptions to Coverage
In addition to the limitations discussed above, there are certain exceptions to coverage that may be included in a title insurance policy. These can vary based on the specific policy and the location of the property, but may include:
- Easements that are not recorded in public records
- Restrictions on the use of the property that are not recorded in public records
- Encroachments or boundary line disputes that are not disclosed by a survey
It is important to carefully review the exceptions to coverage section of a title insurance policy to understand any potential risks or issues that may not be covered by the policy.
Unknown Encroachments
One common question that arises in the context of title insurance is whether it covers unknown encroachments on a property. In general, the answer is no. Title insurance policies typically cover issues like forged documents, fraud, and liens that were not disclosed at the time of issuance. However, they do not cover issues like encroachments that were not discovered until after the policy was issued.
| Covered by Title Insurance | Not Covered by Title Insurance |
|---|---|
| Undisclosed liens or mortgages | Unknown encroachments |
| Forged documents or signatures | Issues related to land use or zoning |
| Fraud in the execution of documents | Mineral or water rights issues |
If you are concerned about potential encroachments on a property, it is important to have a survey done before purchasing the property to identify any potential boundary line disputes or other issues. If an encroachment is discovered after the purchase, you may need to work with the other property owner to resolve the issue or potentially pursue legal action.
What are encroachments?
Encroachments refer to any unauthorized intrusion, intrusion or interference by a neighbor or a third party into your property. In other words, encroachments occur when someone builds, places, or stores something on your property without your permission, or when they infringe on your property rights by carrying out activities that diminish your rights or property value.
Encroachments can take many forms, ranging from minor intrusions such as tree branches hanging over a fence to more significant issues like a neighbor building a fence on your property or constructing a new structure that overlaps your boundary line.
Some common types of encroachments include:
- Building structures (e.g., garage, shed, or fence) that cross over the property line.
- Planting trees or bushes that extend onto your property.
- Overhanging structures such as balconies or rooflines, which encroach on your airspace.
- Blocking access to your property or part of it.
- Polluting or interfering with your access to water or other resources.
Types of Encroachments
When it comes to real estate, encroachments are a common issue that can arise. Encroachments occur when a property or structure extends beyond the boundary lines of its own property and intrudes onto a neighboring property. This can be a result of a mistake made during property lines and surveys, or intentional use of the neighboring property without permission. Encroachments come in various forms, and it’s important to understand the types of encroachments to determine if title insurance will cover them.
- Structural encroachments: Structural encroachments happen when a permanent structure is placed on a property without permission from the owner or proper documentation. This can be a shed, garage, or even a portion of the house.
- Fence-line encroachments: Fence-line encroachments happen when a fence is built beyond the boundary lines of a property and onto the neighboring property.
- Easement encroachments: Easement encroachments happen when a property owner has the legal right to use a neighboring property, but has exceeded their limitations by using a portion of the property that wasn’t authorized.
- Encroachment of public property: Encroachment of public property happens when a property owner builds onto public land or into a public access area without the proper permissions and permits.
- Encroachment of private property: Encroachment of private property happens when a property owner encroaches on their neighbor’s land by using it without authorization, for example, by parking on their neighbor’s driveway or using a portion of their land as a storage.
- Boundary line disputes: Boundary line disputes happen when two property owners have a dispute over the locations of their boundary lines, causing one property to encroach on the other.
Does Title Insurance Cover Unknown Encroachments?
When purchasing a property, it’s important to consider purchasing title insurance to protect yourself from any potential unknown encroachments. However, it’s important to note that the coverage varies depending on the type of policy you purchase.
Standard title insurance policies cover encumbrances like liens, easements, and other title issues, but may exclude coverage for unknown encroachments and boundary line disputes.
| Type of Title Insurance Policy | Encroachment Coverage | Boundary Line Coverage |
|---|---|---|
| Standard Title Insurance Policy | May exclude coverage | May exclude coverage |
| Enhanced Title Insurance Policy | May provide coverage | May provide coverage |
| Homeowner’s Title Insurance Policy | May provide coverage | May provide coverage |
While title insurance may not always cover unknown encroachments, working with a qualified real estate attorney can help you identify and handle any encroachments that may arise during the transaction. Consulting with an expert can provide assurance and protection throughout the home buying process.
Scenarios where title insurance covers unknown encroachments
When purchasing a property, title insurance is essential in protecting buyers against any unknown encroachments on the property. An encroachment is when someone, or something, trespasses on someone else’s property.
So, how do you know when title insurance covers unknown encroachments? Here are a few scenarios:
- If a neighbor has built a fence, deck, or structure that is on the property line or over it, without the homeowner’s knowledge or permission.
- If an existing property has been renovated, and the new structures or additions have been placed on neighboring property lines without any boundary agreement or permission.
- If an encroachment is discovered after closing on a property, and the homeowner was unaware of it during the purchase.
In the above scenarios, title insurance can cover the cost of legal fees required to remove the encroachments. Additionally, if the encroachment damages the property in any way, title insurance can provide compensation for any losses.
However, it is important to note that title insurance coverage varies, and it is best to read the policy thoroughly to ensure that encroachments are indeed covered. Some policies might exclude coverage for encroachments that have been recorded or disclosed during the purchase process.
| Title Insurance Coverage for Encroachments | What it covers | What it does NOT cover |
|---|---|---|
| Standard Coverage | Covers encroachments that are unknown and not recorded in public records | Excludes encroachments that are known or disclosed prior to purchasing the property |
| Enhanced Coverage | Covers encroachments that are unknown but recorded in public records, as well as those that are not recorded | Excludes encroachments that are known or disclosed prior to purchasing the property |
| Location Coverage | Covers encroachments on a specific part of the property, such as a swimming pool or fence | Excludes any other encroachments that are not specifically listed in the policy |
Overall, it is important to invest in title insurance to protect yourself from any unforeseen encroachments on your property. While coverage varies, most policies offer protection in the scenario where the homeowner was unaware of the encroachment during the purchase process.
Does Title Insurance Cover Unknown Encroachments?
Q: What is an encroachment?
A: An encroachment is when someone builds on or uses someone else’s property without permission.
Q: What are unknown encroachments?
A: Unknown encroachments are when someone builds or uses someone else’s property without permission, and the new property owner was not aware of it at the time of purchase.
Q: Does title insurance cover unknown encroachments?
A: It depends on the policy. Standard title insurance does not cover unknown encroachments, but an enhanced policy may provide coverage. It’s important to review the policy details before purchasing title insurance.
Q: What should I do if I discover an unknown encroachment?
A: Contact your title insurance company and report the encroachment. They will investigate and determine whether the policy covers the issue.
Closing Title: Thanks for Reading!
We hope this article helped you understand whether title insurance covers unknown encroachments. Remember, it’s always important to review your policy details before purchasing title insurance to ensure you have the coverage you need. If you discover an unknown encroachment, be sure to contact your title insurance company. Thanks for reading and come back soon for more informative articles!