Are there any exclusions or special conditions in the title insurance policy?
Yes. Title insurance policies, like any insurance policies, typically include exclusions and special conditions. These limitations define the scope of coverage and specify scenarios where coverage does not apply.
It's crucial for buyers and lenders to review the title insurance policy thoroughly, ask questions about any exclusions or special conditions, and consider whether additional endorsements or coverage are necessary to fully protect their interests.
It's also important for policyholders to understand these exclusions and conditions to have a clear idea of what is and isn't covered. While these can vary depending on the insurer and the specific policy, common exclusions and special conditions in title insurance policies include:
Governmental Actions and Regulations:
Restrictions and regulations imposed by governmental entities.
Losses due to eminent domain or police power.
Property Rights Issues:
Defects, liens, or encumbrances that are known to the insured but not disclosed to the insurer.
Rights or claims of parties in possession of the property that are not recorded in public records.
Environmental and Land Use Issues:
Issues related to environmental laws, such as contamination or hazardous waste.
Zoning, land use, building permit, and subdivision laws or regulations.
Specific Liens and Encumbrances:
Specific liens or encumbrances listed as exceptions in the policy.
Taxes or assessments that are not yet due or payable.
Errors or Problems in Documentation:
Problems related to the accuracy, authenticity, or validity of documents after the policy's effective date.
Issues arising from forgery, fraud, duress, incompetency, or incapacity that occur after the policy date.
Rights of Others:
Claims of those with rights arising out of leases, contracts, or options that are not recorded.
Easements or claims of easements not shown by public records.
Water and Mineral Rights:
Water rights, coastal boundaries, or tidelands issues.
Mineral rights issues, if they are not specifically covered in the policy.
Native American Land Claims:
Claims arising from Native American land rights or tribal claims.
Pre-Existing Violations:
Violations of any covenant, condition, or restriction affecting the property that existed before the policy date.
Standard Exceptions:
Standard exceptions that are commonly found in title insurance policies, which can be removed or modified based on a more thorough title search or additional endorsements.
Special Conditions:
Policies may also have special conditions that dictate how claims are to be filed, what constitutes a claim, and any duties the insured has upon the discovery of a title issue.
