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Title insurance survey coverage

3,910 Views | 14 Replies | Last: 3 yr ago by Neches21
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: We Split Commissions. Full Service Agents in Austin, Bryan-College Station, Dallas-Fort Worth, Houston and San Antonio. 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.
Neches21
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Bumping this.

Can anyone dumb down what this title policy exclusion means and maybe an example of how it might impact a buyer?

We are under contract to purchase a house and acreage that has not been surveyed since the 1940s.

After executing the contract I found that the land may be 7 acres less than what is shown on the appraisal district and what the seller represented. We are awaiting a survey.

The contract has option (i) checked, but we still have plenty of time to make an amendment to the contract.
chuckd
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Schedule B of your title policy is your title company's list of exceptions that they won't cover in case of a claim. They will list all recorded restrictive covenants, easements, setbacks, HOAs, etc. You should look at the list and make sure you are aware of them and the implications.

Part of the list is boiler plate language, one of which reads:

Any discrepancies, conflicts, or shortages in area or boundary lines, or any encroachments or protrusions, or any overlapping improvements.

Meaning they will not cover you in case your survey is incorrect for the above items. If you buy the coverage in the OP, this exception will instead read:

Shortages in area.

These all give you coverage if your survey is wrong. An example is your house is not actually on your land, but on your neighbor's. Or his is on yours. Or boundary lines are screwed up.

I'm not a lawyer, but if your land ends up being 7 acres short of what the survey shows, you will not have a claim against the title company as the "shortage in area" is still excepted. Your only recourse would be to go after the surveyor.
chuckd
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Though I'm thinking if boundary lines are correct, how could the acreage come up short? It would have to be a simple calculation error which seems unlikely.
Neches21
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Thanks for the advice!
We are amending the contract and buying the extra coverage. It was only $91.00
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