what are standard title exceptions

by Toby Lang MD Published 3 years ago Updated 2 years ago

The standard exceptions are broad, and the first four are typically the same in all states:

rights of parties in possession (this exception would include, for example, the rights of a tenant with an unexpired lease term)
encroachments, boundary issues, and other matters that an accurate survey would disclose
any easements not shown by the public records, and
construction and worker's compensation liens.

Standard: Most of the standard exceptions are similar across different states and include: Rights of parties in possession — such as current tenant with an existing, unexpired lease. Boundary issues or encroachments — details found on an accurate survey. Easements — not shown/documented by official public records.Aug 20, 2018

Full Answer

What is an exception to a title policy?

An exception is a specific item that is not covered by the policy. Any exception listed on the title commitment carries over to the title insurance policy and limits coverage provided under the policy. The first few Schedule B-II exceptions are called “standard exceptions”. Every title commitment has standard or regional exceptions.

What are the standard exceptions to the title commitment?

Every title commitment has standard or regional exceptions. These are exclusions from coverage that are not unique to the property under contract; they are applied by the title company to all properties. The standard Owner’s Policy does not cover defects in title, losses, or claims that fall within the standard exceptions.

What is the standard tax exemption in title insurance?

A standard title policy can become subject to these encumbrances, which is why all underwriters require the standard tax exception remain included in all policies. This exception protects contractors, subcontractors and similar entities who improve upon the property by providing them with lien priority.

What are the exceptions to the ALTA title commitment?

The exceptions are typically in Schedule B, Section II of an ALTA title commitment and come in two types: Most of the standard exceptions are similar across different states and include: Rights of parties in possession — such as current tenant with an existing, unexpired lease

What is a standard exception?

Standard Exceptions — certain classes of employees in workers compensation insurance who are common to many types of business and are separately rated unless included specifically in the wording of the governing occupational classification.

What are standard exceptions in a title policy Florida?

There exist, in total, five such exceptions: gap, tax, construction lien, survey and parties in possession.

What are exceptions in real estate?

In property law, the phrase exception in deed refers to a statement in a deed of real estate which reserves certain rights to the transferor (for example, easements, mineral rights, or a life estate).

Which of the following is not a standard exception in a title policy?

Answer: Allowing the closing agent to credit the buyer with the amount necessary to pay off the lien. Which of the following is not a "standard exception" on a title commitment? Parties in possession.

Which exceptions may not be deleted from a title insurance policy?

Some exceptions on the title policy can be difficult or perhaps even impossible to remove. Common examples include certain types of liens, oftentimes involving bankruptcy and foreclosure; easements; encroachments; and covenants, conditions, restrictions, and zoning requirements.

Which type of events are generally on a title insurance policy schedule of exceptions?

The exceptions will include almost any recorded document that affects title to the property. These exceptions will generally consist of unpaid taxes, easements, restrictive covenants, and other matters recorded against the property being insured.

What does exception mean in a deed?

Exception in deed is a reservation of a property interest in the deed for the transferor. The transferor is explicitly keeping some part of the property being given to the transferee such as an easement or a life estate.

What are exceptions to coverage?

What does exception mean on a survey?

The purpose of the survey exception is to make it clear that the policy does not protect against matters outside a review of real estate records. In other words, matters that would be discovered by a surveyor are not covered by a title insurance policy unless a survey is obtained prior to closing.

What does exception mean in insurance?

Exception (to Exclusion) — circumstances included in an exclusion that retain coverage. Exceptions limit the application of the exclusion such that it does not apply to the described circumstances.

What is a schedule of exceptions on a title policy quizlet?

As the name suggests, the Schedule of Exceptions is a specific list of items not covered and can include things such as unrecorded mechanic's liens, assessments, water rights and mining claims.

What is a bump clause in a contract?

A bump clause allows sellers to enter into a contract with a buyer but continue to market the property. If the seller then receives a better offer, they can bump the original buyer to get them to waive their contingency or offer more.

Which of the following is not a true statement with regard to the standard exceptions on a title commitment?

Which of the following is not a true statement with regard to the standard exceptions on a title commitment? They cannot be removed.

What is a schedule of exceptions on a title policy quizlet?

As the name suggests, the Schedule of Exceptions is a specific list of items not covered and can include things such as unrecorded mechanic's liens, assessments, water rights and mining claims.

What is the difference between exclusion and exception?

Exception (to Exclusion) — circumstances included in an exclusion that retain coverage. Exceptions limit the application of the exclusion such that it does not apply to the described circumstances.

What is an exceptions clause in a deed?

What is title insurance?

Title insurance protects buyers of real estate against financial loss due to defects in the title of the subject property. When purchasing a home or other real property, buyers engage a title company to do a title search aimed at establishing the fact that the present owners have the right to sell the property as evidenced by a free and clear title that can be legally transferred to the new owner.

What are some examples of title defects?

A few examples include undiscovered liens and other encumbrances on the property, errors in public records, boundary/survey disputes or unknown easements, forgeries or other misrepresentations, improper wording of title and ownership transfer documents, missing signatures that are necessary for proper title transactions, and failure to follow correct real estate document recording or filing procedures.

What is the purpose of a title search?

Thus, the necessity of a title search aimed at determining that the subject property title is clear of any defects, or to find defects and allow them to be properly remedied before the property is sold or transferred. In most cases, this involves going through all the official records associated with the subject property. These are commonly held by the county or city government office charged with recording and storing such information. The title company takes care of this task during the title search.

What is title binder?

Therefore, once a successful title search has been conducted, a title company will issue buyers a title commitment, sometimes referred to as a title binder or preliminary title report. This basically amounts to a promise by the title company to issue a title insurance policy to the new owners after closing. The title commitment includes the same terms, conditions, and exclusions that will appear in the actual insurance policy.

What is clouded title?

A clouded title is exactly what the name implies: a case where title is not clear, making it difficult to identify the true owner of the property. One of the most common defects that can cloud a title is a false ownership claim on property that actually belongs to someone else.

What is an exception in title insurance?

What is an ALTA title commitment?

Title commitments are most often presented on a standard form distributed by the American Land Title Association or ALTA. The ALTA form contains a section generally known as the Schedule B Section II. This is a list of exceptions to coverage offered by the title insurance policy. An exception is a specific item that is not covered by the policy. Any exception listed on the title commitment carries over to the title insurance policy and limits coverage provided under the policy.

What is an easement agreement?

An easement is a legal agreement which gives one party the right to use all or part of another party's property for the reasons defined in the easement documents. For example, a homeowner with a driveway that is partly on a neighbor's land can get an easement from the neighbor to use that part of the driveway on the neighbor's property. A right of way gives one party the right to travel over the land of another, such as an electricity company obtaining a right of way from a person who owns land around electric service poles. Both disclosed or undisclosed easements and rights of way are exempted from title insurance coverage. Grants of mineral and water rights over the land to companies or private developers are exempted from title insurance coverage in some states, particularly in the West, according to the American Bar Association.

What is housing assistance?

By Anna Assad. Title insurance protects a homeowner from claims made against his property's title, or the document history of ownership, but does have standard exemptions from coverage. The title insurer will defend the homeowner in court against claims on the home's title, such as a person granted ownership on an unrecorded ...

What are the exemptions for title insurance?

Other standard title exemptions include environmental protection regulations, which introduce special rules about land in specially designated areas, situations that are created after the effective date of the insurance policy and any existing violations of the building, zoning and environmental regulations.

What are standard title exemptions?

What is a right of way?

A right of way gives one party the right to travel over the land of another, such as an electricity company obtaining a right of way from a person who owns land around electric service poles. Both disclosed or undisclosed easements and rights of way are exempted from title insurance coverage.

Can you claim a lien on a property without your knowledge?

The claim of a person living without your knowledge in a property you purchased is exempted from title insurance coverage if no public record of the tenancy, such as a recorded lease, exists. A mechanic's lien, or special lien filed by a contractor who did work on the property and was not paid, is not covered if the lien was not filed in ...

When did Anna Assad start writing?

Anna Assad began writing professionally in 1999 and has published several legal articles for various websites. She has an extensive real estate and criminal legal background. She also tutored in English for nearly eight years, attended Buffalo State College for paralegal studies and accounting, and minored in English literature, receiving a Bachelor of Arts.

What is the additional premium to delete this exception?

The additional premium to delete this exception is 15% of the Basic Premium Rate in effect at the time the coverage is provided.

What is the NMAC standard exception?

The standard exceptions to coverage are required pursuant to § 13.14.5.9, NMAC and must appear in all commitments and under Schedule B of all policies, unless deleted in compliance with the regulations.

How long does it take to delete a home?

To delete for an existing home, the seller must execute an affidavit and indemnity stating that no improvements have been made within 120 days of issuance of the policy; and/or an affidavit that all work has been paid for in full, along with copies of all receipts and lien waivers from the mechanics and materialmen.

What is required to delete an exception?

To delete exception, survey work is required (this may include a recent ALTA Survey, a recent boundary stake survey, or a recent Improvement Location Report – depending on the nature of the property and the insurer’s underwriting requirements).

What is the purpose of a deletion?

Deletion provides coverage against claims by tenants, squatters or other parties in physical possession of the property. To delete, an affidavit is required from the sellers that they have sole possession of the property.

What is an encroachment in a survey?

Encroachments, overlaps, conflicts in boundary lines, shortages in area, or other matter which would be disclosed by an accurate survey and inspection of the premises. Deletion of this exception provides coverage against encroachments, overlaps conflicts in boundary lines shortages in area or other matters disclosed by an accurate survey.

When was the water rights exception amended?

Water rights, claims or title to water. This exception was amended in 2009 to provide coverage against mining claims and patents, by deleting that portion of the exception. However, coverage against "water rights, claims or title to water" is not available and this exception may not be deleted.

What is the exception to the post closing update?

This exception pertains to matters recorded after the recording of the insured instruments but before the effective date of the commitment. By way of example, if a post-closing update discovers, subsequently to the date of closing, a claim of lien was placed against the borrower, and this document was recorded prior to the insurance of the mortgage, the lien would take priority over the mortgage. This would greatly encumber the process for all parties, including the insured lender.

What are the exceptions to title commitments?

There exist, in total, five such exceptions: gap, tax, construction lien, survey and parties in possession.

How to contact Marina Title?

What is property survey in Florida?

Property surveys are conducted to ascertain, among other issues, that no easements have been made against the property. If this exception was not removed by the previous owner due to a failure to properly survey the property, the current owner will be forced to deal with any legal matters stemming therefrom. Florida Statute 627.7842 (1) (a) requires that “a survey meeting the minimum technical standards… [be] completed on the property within 90 days before the date of closing.” These “minimum technical standards” can be found under Chapter 61G17-6.003 of the Florida Administrative Code.

When is a survey required in Florida?

Florida Statute 627.7842 (1) (a) requires that “a survey meeting the minimum technical standards… [be] completed on the property within 90 days before the date of closing.”. These “minimum technical standards” can be found under Chapter 61G17-6.003 of the Florida Administrative Code.

Does Florida require an underwriter to strike an exception?

As long as an adequate survey is provided, the State of Florida demands that the underwriter strike this exception.

Does Florida require a gap exception?

The State of Florida, however, requires that the gap exception be removed at the time of closing. This responsibility falls upon the title agent, who will perform this function upon the receipt of monies and when prepared to close.

What is a tax assessment?

TAXES AND ASSESSMENTS: Taxes or assessments that are not shown as existing liens by the records of any taxing authority that levies taxes or assessments on real property or by the public records. This general title exception excludes from coverage taxes and assessments that are not already liens on the property.

What is a gap in insurance?

GAP: Defects, liens, encumbrances, adverse claims or other matters, if any, created, first appearing in the public records or attaching subsequent to the effective date hereof but prior to the date the proposed insured acquires of record for value the estate or interest or mortgage thereon covered by this commitment.

What is a survey in land?

SURVEY: Any encroachment, encumbrance, violation, variation, or adverse circumstance that would be disclosed by an inspection or an accurate and complete land survey of the Land and inspection of the Land.

What is a party in possession?

PARTIES IN POSSESSION: Rights of or claims by parties in possession of the land not shown by the public records.

Does title exception cover gaps?

This general title exception excludes from coverage any title matters that appear in the gap between the effective date of the title commitment and the time and date of recording of the insured instrument post-closing. Lenders can (and should) request that the effective date of the title commitment be updated just prior to closing so that it narrows the gap within which undiscovered liens could exist. Lenders should always confirm that the title agent will provide gap coverage either automatically or by gap affidavit.

Do you have to pay taxes at closing?

All taxes that are due and payable should be paid at closing. A lender can confirm amounts due and payable via the tax collector. This general title exception should be removed from the loan policy and replaced with a specific exception limited to those taxes and assessments not yet due and payable.

Do you have to work with a title agent to get title insurance?

In order to obtain the most extensive title insurance coverage, lenders should work with the title agent in order to remove (or at least narrow the scope of) any general title exceptions from the loan policy.

What is a Schedule of Exceptions on a Title Policy?

The exceptions are typically in Schedule B, Section II of an ALTA title commitment and come in two types:

What does title insurance exclude?

When the seller of the property has an existing title insurance policy, a buyer should ask for a copy of the list of exceptions. Doing so will give the potential new homeowner detailed information on which exceptions are and are not covered. To give you an idea, title insurance typically excludes coverage for: Zoning ordinances. Current taxes.

What are the exceptions to the standard?

Standard: Most of the standard exceptions are similar across different states and include: Rights of parties in possession — such as current tenant with an existing, unexpired lease. Boundary issues or encroachments — details found on an accurate survey. Easements — not shown/documented by official public records.

What is included in title insurance?

To give you an idea, title insurance typically excludes coverage for: 1 Zoning ordinances 2 Current taxes 3 Easements 4 Rights of eminent domain 5 Governmental regulations relating to property use 6 Bankruptcy claims

What is the most important component of dealing with title exceptions?

Another important component of dealing with title policy exceptions is reviewing existing recorded documents.

Why is title commitment important?

A title commitment is one of the most critical documents in closing because it details what is covered and not covered by the title insurance policy. It is a crucial step in the home buying process so you know what to expect with not only how you can use your property for the duration of the ownership, but also your accurate legal protections. ...

Where are special exceptions located?

Any special exceptions are typically located underneath the standard exceptions in Schedule B, Section II of the policy as well. Special exceptions can be diverse and include things like neighborhood covenants, court actions, easements on official public records, partnership agreements, etc. Within the full title commitment, the document should contain a comprehensive list of both standard and special exceptions.