Legal Services + Risk Management
LEGAL PERSPECTIVES Navigating property laws & regulations
Correcting the Past, Securing the Future
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TARA J. ROSE
KATE M. GRADY
SAFETY & SECURITY
hen it comes to risk mitigation for property investors, title insurance may be the best kept secret in the industry. While the concept of title insurance is well known and most investors understand the basic coverage offered by a title insurance policy, many don’t know about the optional – and valuable – coverage that may be available to them. Litigation over property rights occurs daily, and often the risk at issue could have been covered by title insurance. Even if you haven’t purchased a title policy for your own benefit, if you have a mortgage, you have purchased title insurance for your lender. For even the simplest transactions with the smallest of real estate collateral, lenders routinely require specific endorsements to their title coverage. Clearly, banks and other financial institutions are on to something. So, what is it that your lenders know that you don’t? Simply put: Lenders know to take advantage of any chance to minimize risk. They know that extended title insurance policies with appropriate endorsements may cost a bit more at closing (usually on buyer’s dime), but will save them money in the long run. From
insuring that a building conforms to applicable zoning ordinances, to removing the arbitration provisions from the title policy itself, there are many ways that title endorsements can change a title policy. For instance, if you are buying an LLC in order to obtain a parcel of land, the prior owner’s knowledge of defects could be imputed to you as the new shareholder – even if you had no idea about the issue at hand. However, a non-imputation endorsement would prevent the title company from assigning that knowledge to you as a defense against your claims. The American Land Title Association (ALTA) is primarily responsible for creating forms of standard endorsements
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DECORATIVE STYLES
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800.295.8468
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800.295.8468
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Properties | February 2024