Title endorsements are supplements to the basic title insurance that homebuyers are typically required to obtain when closing on a new property. Title insurance is meant to protect the buyer from unforeseen claims on the property that may result in devastating financial losses. While the standard policy provides coverage against a number of common title issues such as unpaid property taxes or contractor liens, some properties may have specific characteristics or issues that require additional insurance. Title endorsements provide coverage for such property-specific scenarios.
In this article, we will review some of the more common endorsements. The ANSTitle agents also share tips on how to determine which title endorsements you may need. Â
Common Title Endorsements
There are dozens of different endorsements that are meant to protect property owners in various scenarios. ALTA, the American Land Title Association, offers approximately 80 standard endorsement forms. Below are some of the more common endorsements that home buyers may need. Keep in mind that this list is not all-inclusive and not every property would require all of these endorsements.
Access and Entry
Some real estate parcels cannot be reached directly from a public road and use the easement of neighboring property for access. Such properties would require the Access and Entry title endorsement. It is meant to protect the owner from financial losses that may occur due to the land not being adjacent to a public right-of-way or if it becomes inaccessible through the neighboring properties.
Easements and Encroachments
These title endorsements may be needed if there are any improvements on the insured property that encroach on a neighboring parcel or utility easement. The endorsement would cover the losses resulting from having to remove the improvements.
Minerals and Other Subsurface Substances
Many properties sit on top of underground minerals, gas, and other natural resources and another party may have the rights to extract these substances. This title endorsement protects the property owner from any losses that may occur as a result of having to remove buildings or other land improvements in order to accommodate the substance extraction. Â
Covenants, Conditions, and Restrictions
This endorsement provides coverage for losses caused by violations of restrictive covenants. For example, an improvement on the property may be allowed by the local zoning regulations, however, it may be in violation of the subdivision’s specific covenants and restrictions.
Survey Coverage
Often called Same as Survey, this title endorsement is used to cover any discrepancies between the property survey described in the policy and the endorsement. It typically requires a current survey of the land in order to verify the accuracy of the boundaries.
Contiguity
This endorsement is used for properties that consist of multiple parcels. It ensures that there are no other plots or gaps of land in between that may break the contiguity of the insured property and it covers any losses that may result from the detachment of the individual parcels.
Zoning
A zoning endorsement insures the current zoning classification of a property and its authorized uses. This coverage will recoup the owner’s losses if they are no longer allowed to use the property for a specific purpose because of a zoning law violation. These endorsements usually require an independent zoning report or zoning verification letter from the local planning department. Â
Lender-Specific Endorsements
While the above endorsements are available to both lenders and property owners, there are other endorsements that are only offered to mortgagees. Examples of lender-specific title endorsements include:
- Truth in Lending Endorsement
- Variable Rate Mortgage Endorsement
- Environmental Protection Lien
- Assignment of Mortgage Endorsement
- Mortgage Modification Endorsement
- Future Advance – Reverse Mortgage Â
Which Title Endorsements Do I Need?
Lender’s Policy vs. Owner’s Policy
With title endorsements that are available to both lenders and owners, the specific language of a lender’s endorsement may be slightly different than that of an owner’s policy. If the particular real estate transaction requires both policies, both versions of the endorsement will also be needed. Remember, a lender’s policy (and any endorsements by extension) protects the mortgagee from financial losses whereas an owner’s policy protects the new property owner.
Follow Your Mortgage Lender’s Lead
If you are unsure what title endorsements you may need for your new property, you can start by reviewing the endorsements that your lender is asking for in order to approve your mortgage. Since most lenders provide at least 80% of the financing, they are extremely careful when it comes to insuring their investment with the right endorsements.
Consult With Your Title Insurance Agent or Attorney
Alternatively, you can ask your title insurance agent to help you determine which endorsements may be applicable to the property you are purchasing. A real estate attorney may also be able to assist with this process. In either case, an extensive survey of the property may be needed in order to determine the right endorsement coverage. Â
Cost of Title Endorsements
In general, the fees for each individual title endorsement are not very high. Nevertheless, homebuyers should purchase only the endorsements that are applicable to their property in order to avoid unnecessary expenses. Furthermore, if an endorsement is already on the loan policy, the fee for it on the owner’s policy would typically be very low.
Just like basic title insurance, the cost of title endorsements varies from one state to the next. All insurance providers within the state, however, should charge the same fees for individual endorsements. Depending on your location, the endorsement fees may be listed as individual line items or bundled together with the price of the basic policy.
If you’d like to learn more about the purpose of a particular title endorsement or you need help figuring out which endorsements you should purchase for your new property, contact one of the ANSTitle agents today. We handle closings in all 50 states and have helped thousands of clients with selecting the right title insurance coverage.
