Standard v.

Enhanced
Land Survey Matters [Part I] By Todd Ewing
AS A HOMEBUYER IN THE DISTRICT of Columbia, Maryland and Virginia, you have a choice between two types of owners title insurance coverage Standard (Limited) Coverage or Enhanced Coverage. When deciding on which coverage, you may consider the possibility of being forced to remove a structure because it extends onto adjoining land or easement. The Standard owners title insurance policy contains 4 basic insuring provisions including (1) title being vested other than as stated, (2) any defect in or lien or encumbrance on the title, (3) unmarketability of the title, (4) lack of a right of access to and from the land. While the coverage under the Standard policy is broad, the policy form excludes coverage for certain matters that are traditionally outside the scope of a title search of the public records. One of those excluded matters concerns existing encroachments of structures or encroachments created subsequent to the date of the policy. In other words, the Standard policy includes an exception for survey matters. Unlike the Standard coverage, the Enhanced owners title insurance coverage insures against forced removal of a structure (except for boundary walls and fences) due to an encroachment. Moreover, the Enhanced coverage covers the insured in the event that, after the date of policy, someone else builds a structure that encroaches on to the insureds land. Specifically, the Enhanced policy covers the insured in the event the insured is forced to remove an existing structure because it extends on to adjoining land or on to any easement, or it violates a subdivision restriction, or it violates an existing zoning law. There are many other insuring provisions to consider when selecting the type of owners title insurance coverage and I invite all of our prospective homebuyers to take a look at our coverage comparison.

Standard v. Enhanced
Real Estate Taxes [Part II] By Todd Ewing

IN MY VIEW, THE MOST UNDERRATED INSURING PROVISION of the Enhanced Owners Title Insurance Policy relates to real estate tax assessments occurring after the transfer of ownership. The Enhanced policy we offer through our underwriter First American states (as a covered risk): "A taxing authority assesses supplemental real estate taxes not previously assessed against the Land for any period before the Policy Date because of construction or a change of ownership or use that occurred before the Policy Date." While the Standard (Limited) Owners Title Insurance Policy insures against a real property tax lien and/or assessment imposed by the taxing authority prior to the policy date (i.e., transfer of ownership), it does not insure against real property liens or assessments occurring after the policy date. Oftentimes, prior to or at the time of closing, the governmental taxing authority fails to properly or accurately report unpaid taxes, or later imposes a supplemental tax bill due to new construction re-assessments or change of property use by the seller. For example, in the District of Columbia, the tax class may change prior to transfer of ownership from owner-occupied to vacant/abandoned, resulting in a sizeable tax assessment imposed after the buyer has taken ownership. Another example, in Maryland, a supplemental tax bill may be issued due to construction improvements, resulting in a hefty assessment imposed on the buyer well after the closing.

Oftentimes, prior to or at the time of closing, the governmental taxing authority fails to properly or accurately report unpaid taxes, or later imposes a supplemental tax bill due to new construction re-assessments or change of property use by the seller.

For example, in the District of Columbia, the tax class may change prior to transfer of ownership from owner-occupied to vacant/abandoned, resulting in a sizeable tax assessment imposed after the buyer has taken ownership. Another example, in Maryland, a supplemental tax bill may be issued due to construction improvements, resulting in a hefty assessment imposed on the buyer well after the closing.

In each of these examples, the the homebuyer would be covered by an Enhanced Owners Title Insurance Policy but would not be protected if he/she elected to purchase the Standard (Limited) Owners Title insurance Policy. There are many other insuring provisions to consider when selecting the type of owners title insurance coverage and I invite all of our prospective homebuyers to take a look at our title insurance coverage comparison.

Standard v. Enhanced
Building Permits [Part III] By Todd Ewing

SO YOUVE JUST COMPLETED THE PURCHASE and closing on your new fixer-upper home. Now its time to hire an architect and spend countless hours planning for a new addition to the family room. You submit an application for your building permit. After a few weeks, your permit is denied based on a prior violation of landscaping rules established by the homeowners association. As it turns out, your seller had constructed the $50,000 Arcadia-style garden in your backyard, complete with granite cascade and espalier fruit trees and in violation of your homeowners association rules. You are now faced with the expensive prospect of removing the fine landscaping to become compliant so that you can obtain your building permit. Or, you must decide to hire an attorney to argue your case to the homeowners association. Few homebuyers in this situation would think about the possibility of their owners title insurance policy covering this sort of matter. For the homebuyer who selected the enhanced owners title insurance coverage, the title insurance company will cover the homebuyer for loss. Unfortunately, for the homebuyer who chose the standard title insurance coverage, the problem will remain that of the homebuyer without coverage for his or her loss.

Standard v. Enhanced
Mechanic's Liens [Part IV] By Todd Ewing

AS A HOMEBUYER, you have the choice in the type of owners title insurance coverage. Throughout this series of comparing the two types of coverage (Standard Coverage vs. Enhanced Coverage) you have observed that the primary difference relates to matters affecting your title post-policy date and pre-policy date. That is, the standard owners title insurance coverage mostly covers only matters that occur prior to the date the policy was issued, whereas, the enhanced owners title insurance coverage protects you against matters arising prior to the date of the policy, as well as, matters arising after the date the policy has been issued. In the case of mechanics liens, the homebuyer is covered only up to the policy date when he or she elects to purchase the standard owners title insurance coverage. The homebuyer who purchases the enhanced owners title insurance coverage is not only covered for mechanics liens arising prior to the policy date but is also covered for mechanics liens arising after the policy date so long as the labor and material was furnished before the policy date. You might be asking "What is a mechanics lien?" A mechanics lien is a claim filed by a contractor or sub-contractor for labor and material performed on the subject property which, by operation of law, constitutes a lien against title. For example, lets say a seller was a builder and prior to the sale of the property, the seller failed to pay the contractors final bill. In turn, the contractor cannot pay his sub-contractors. As a result, the contractor and/or the sub-contractors file a mechanics lien after the seller has already sold and settled the property. The new homebuyer is now stuck with having to pay the sub-contractors in order to clear his or her title to the property. However, if the homebuyer had elected to purchase the enhanced owners title insurance coverage, the homebuyer would simply make a claim with the title insurance company to pay the sub-contractors. In another example, the sales contract required the seller to perform pest inspection treatment and damage repair. Prior to closing, the seller hired ABC Pest Control to perform the required treatment and repairs and promptly issued a check for the payment of those services. At closing, the seller provided the homebuyer with evidence of payment and an invoice from ABC Pest Control marked Paid. Following closing, ABC Pest Control filed a mechanics lien as a result of the sellers bounced check and the sellers subsequent refusal to make good on the check. In this case, the homebuyer purchased the enhanced coverage and the title insurance company paid ABC Pest Control on the claim. Had the homebuyer purchased the standard coverage, the homebuyer would have been required to pay ABC Pest Control in order to establish clear title.

Standard v. Enhanced
New Construction [Part V] By Todd Ewing

TOO OFTEN WE HEAR PROSPECTIVE HOMEBUYERS or real estate agents dismiss the need for owners title insurance coverage because the property is "new or in a newer development." In fact, nothing could be further from the truth since a large percentage of title claims occur on new construction properties. Title insurance claims on new construction mostly involve cases of mechanics liens. A mechanics lien is a lien placed on the property by a contractor or sub-contractor for unpaid labor and material performed during construction. Many times, a mechanics lien is filed after a homebuyer has purchased the property from the seller. In other words, a title report performed at the time of closing will not reveal the mechanics lien. In this instance, a homebuyer who elects to purchase the standard (limited) owners title insurance coverage will be stuck with having to pay off and clear the mechanics lien at their own expense since mechanics lien coverage is not afforded under this type of owners policy. However, if the homebuyer selects the enhanced owners title insurance coverage, there is specific affirmative coverage for a mechanics lien so long as the work was performed prior to the date of closing (or policy date). Title insurance claims on new construction mostly involve cases of mechanics liens. If you are purchasing a property that is either new construction or recently renovated, not only should you obtain owners title insurance coverage but you should elect to purchase the enhanced type of coverage.