Be careful of exceptions in title insurance commitments and avoid surprises

Standard Exceptions After the title insurance company searches the title to your property, it issues a commitment to insure it. That commitment carries certain exclusions from coverage known as standard exceptions. These ordinarily apply to all properties. Most commitments for title insurance have at least four standard exceptions. Those are:

• The rights of anybody in possession like a tenant
• Issues that a current and accurate survey would disclose
• Undisclosed easements
• Construction or repair liens for services or materials

Other standard exceptions might apply, depending on the nature of the property and where it's located.Special exceptions Along with the standard exceptions on a commitment for title insurance, there are also special exceptions. These usually arise as a result of the title insurance company's search of public records in connection with the property. Special exceptions are where more significant title issues might arise, particularly in the context of outstanding liens like the balance of the seller's mortgage.Mortgage and lien payoffs It's usual and customary to pay the seller's mortgage off at time of closing with the seller's gross proceeds, but if there's a judgment against the seller, that also operates as a lien on the property's title. Most title insurance companies are going to require that to be paid at time of closing, but some won't. Buyers need to insist on the seller satisfying that judgment either before or at the time of closing. After all, most buyers are promised a warranty deed free of any liens, clouds or encumbrances on title. Nobody wants a judgment against somebody else shoved onto them.

Clearing title exceptions Title companies might clear an exception by obtaining the seller's affidavit. For example, a seller named William Jones might have an immaculate credit history, but another William Jones might have a $15,000 judgment against him. Most title insurers will accept a standard judgment affidavit from the clean credit William Jones stating that he's not the other William Jones. Survey issues might be resolved by providing a recent certified survey of the property. Special endorsements can also be purchased to insure over exception issues. Any commitment for title insurance needs to be examined thoroughly. An attorney who is experienced in real estate transactions will be worth any fair and reasonable fee that they charge to represent you throughout your purchase. The title insurance work isn't finished after your closing either. You must await receipt of the title insurance policy. After reading the policy in the context of the commitment and waivers of exceptions, amendments to the policy might be required. Your name might not be spelled correctly, the legal description of the property might not be accurate, or other provisions of the policy might need to be changed. You don't want surprises 15 years after you took title to the property when your ready to sell. Understand what exceptions are from your in title insurance company Siloam Springs AR commitment. Prevent any surprises regarding those exceptions from arising in the future.

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