We are often provided a copy of a Seller's existing title insurance policy and a disturbing trend for Buyers is appearing. As a cost cutting move, some title companies have stopped searching for all of the recorded rights that may affect the property being purchased.
If the title commitment and policy are based upon a complete search, Schedule B exceptions from coverage will only list specific matters that have been recorded in the public records and in some jurisdictions non-specific exceptions for unrecorded matters (i.e. survey issues). More and more we're seeing policies with exceptions taken for "any and all recorded covenants, conditions, restrictions (CC&R) and easements." This means that the title company did not search for these property rights. Lenders routinely receive special title coverage over these matters whether searched for on not. Buyers do not receive such coverage.
Most purchase agreements afford the Buyer the opportunity to review the CC&Rs and easements prior to closing and in some cases cancel the deal if they don't like them. If the title company is not providing that information, who is?
Secondly, if it turns out after closing that there are CC&Rs or Easements that restrict or prohibit the Buyer's intended use of the property who is the Buyer going to look to since the title company isn't insuring these matters? When the Buyers can't put their swimming pool in over an undisclosed easement, keep their horses, or put a manufactured home on the property, someone's going to get an unpleasant phone call and maybe more.
I find this a blatantly deceptive practice with serious implications for Buyers and their Realtors®. If a property right or restriction is recorded, the general expectation of our clients is that title policy will reflect that. Title agents engaging in title insurance "lite" do not disclose this practice. They are taking advantage of Buyers who often feel challenged to understand title insurance anyway. Realtors® and their clients do not need to accept this and are clearly within their rights to demand that the title coverage only except recorded property interests.
Select John Bethell Title Insurance Company, Inc., and you get the whole deal. We show all relevant recorded property rights. We do not provide "lite" title insurance.
Title Insurance "Lite" is prevalent throughout the Midwest. I am interested in hearing from Buyers, Realtors®, and title agents with an opinion about this.
John Bethell Title Company, Inc. is a leading provider of Real Estate Closing Services, Title Insurance, and IRS Section 1031 Tax Deferred Exchange services in the Greater Bloomington Indiana area.
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