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Title insurance survey coverage

1,034 Views | 11 Replies | Last: 4 mo ago by JoeCephas1974
chuckd
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AG
On the typical TREC 1-4 family contract, Section 6.A.(8) says

The standard printed exception as to discrepancies, conflicts, shortages in area or boundary lines, encroachments or protrusions, or overlapping improvements:

(i) will not be amended or deleted from the title policy; or
(ii) will be amended to read, "shortages in area" at the expense of Buyer or Seller

Choosing (ii) gives the buyer extra title coverage at very little expense.

I am on my 3rd legitimate title claim. This one and the 2nd were only claims because I bought this coverage. My realtor almost talked me out of it because the house was constructed in 1950 and had changed hands so many times without title problems.

I suggest realtors rethink this coverage.
jja79
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Are you with Chicago or Old Republic?
chuckd
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jja79 said:

Are you with Chicago or Old Republic?
The first claim was with First American somewhat explained here:
https://texags.com/forums/59/topics/2366786

Second was with Westcor. This one is with Chicago Title.
TXAggie4Christ
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And the exceptions coverage is only 5% of the title policy cost so $65-$125 in many transactions and 10% on land only deals I believe.
normaleagle05
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Interesting story on the first claim. What happened on to the second one? I'll assume you can't comment on the current due to ongoing nature.

I've done a lot of title surveys and only had one client that had a claim on an existing policy. State lands issues can be nasty for owners.
chuckd
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The second one was a house I bought on 6 acres. It was adjacent to a man made lake built by the Corps of Engineers in the 1950s. I tried to subdivide the 6 acres to sell off 3 and the entity that controlled the dam prohibited the subdivision. The 3 acres I was selling was part of their auxiliary spillway and therefore the land could not be developed. They relied on an easement that was not on Schedule B or the existing survey provided by the sellers.

It was another substantial claim since I was planning to sell the 3 acres for $200k+ (fairly prime real estate). The payout was what the property was worth without the easement minus with the easement:
(3 acres + 3 acres with house) - 6 acres with house

A family friend is a real estate attorney and he was the one who convinced me to start buying the extra survey coverage. I would not have had a claim on #2 or 3 without it.

TXAggie4Christ is correct that it is very cheap, but can be significant if a claim needs to be made.

"If anyone gives you 10,000 to 1 odds on anything, you take that bet." Kevin Malone
CS78
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nvm
normaleagle05
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It sounds like you need to be hiring better surveyors.

Or maybe you like the title insurance payments enough to forget the headaches? That seems unlikely.
CS78
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Thanks for bringing this up! I hate to admit it that ive been declining the coverage because I failed to research what it actually meant when it was added to the contracts. And Ive been buying land. And some of it to be divided and resold. I use Kerr surveying and they tend to be more expensive but you never know. Im actually selling a property right now that has an easement on my survey but my neighbors surveyor missed it. He's not happy but I'm pretty sure he's SOL. I'll definitely be adding it to future land buys.
Diggity
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The title companies do a poor job of explaining it but I always ask for it when writing up offers. I agree it's cheap coverage but most people's eyes glaze over when you try to tell them why it could be beneficial.
Red Pear Realty
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Sponsor
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Any attorneys out there that would help me go through a title commitment and exceptions and write up a letter to the title co for a fee?
Sponsor Message: Up to 2% Buyers Commission Rebates / $1,200 Full Service For Sale Listings / $500 For Lease Listings
Red Pear Realty

JoeCephas1974
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15 years plus in the title industry and I would always recommend the survey coverage, especially on properties outside of a newer subdivision.
Fair winds and a following sea.
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