What Are the Limits and Exclusions with Title Insurance?
One of the biggest concerns when you purchase real property is that the title conveyed to you is free and clear of liens and other encumbrances. Typically, a buyer purchases title insurance to protect against defects in the title. Be aware, however, that a title insurance policy is not an absolute guarantee that you will receive a clear title because there are limits and exclusions with title insurance. The best way to be certain you understand what the limits and exclusions of your policy are is to consult with an experienced Pennsylvania real estate attorney. A better understanding of what is commonly excluded and what the common limitations are in a title insurance policy, however, is a good place to start.
Title insurance is an insurance policy, similar to other types of insurance you have likely purchased to insure your home, vehicle, or life. As such, you will have an actual contract that should set forth the coverage you purchased as well as the limitations and exclusions. The purpose of title insurance is to protect your financial investment in the property against things such as improper legal descriptions, prior uncancelled deeds of trust, claims to the land by adjoining property owners, and other encumbrances or defects in the title that adversely affect the title to your property. Your actual policy will explain what is covered in Part A and should explain some common exclusions and limitations in Part B. Some of the most common exclusions used by a title insurer to deny a claim include:
- Defects created after issuance of the policy
- Defects of which the insured had knowledge, or should have had knowledge, of at the time the policy was issued.
- Some types of taxes or assessments
- Restrictive covenants
- Border disputes
- Issues clearly identified on a recorded plat
- Eminent domain claims
Finally, the coverage available in the event a policyholder files a claim is not unlimited. Just as you purchase a specific amount of coverage when you purchase other types of insurance, the same applies to title insurance. You are insured up to the amount of the policy limit and no more.
Unfortunately, given the numerous documents that are involved in the closing process, most buyers never even glance at their actual title insurance policy. Only later when they discover a defect in the title do they sit down and read through their coverage. To avoid this often costly mistake it is always best to have an experienced Pennsylvania real estate attorney represent you through the entire closing process to ensure that all documents involved in the process are thoroughly reviewed.
If you are planning to purchase real property, contact an experienced Conshohocken, Pennsylvania real estate law attorney to ensure that your interests are protected throughout the process. Contact the real estate law attorneys at Curley & Rothman, LLC by calling 610-834-8819 today to schedule your free consultation.