Title insurance remains a highly beneficial form of protection, especially for first-time homeowners. This type of indemnity insurance shields you in the event someone sues you and says they have a claim against your home dating to before you purchased it. Common examples of such claims include those tied to the previous owner’s failure to pay property taxes, contractors who were not paid for work completed on the home (mechanics liens), or defects in a property’s title (deed).
The primary purpose of title insurance appears relatively straightforward. However, some homeowners may be left wondering how to actually file a title insurance claim. Here is a close look at this subject.
When Filing A Title Insurance Claim, Make Sure To Have All Information
As with any type of insurance claim, it’s important to fully understand the issue that prompted it to be filed. This means you should make sure that you have all the information relevant to the issue, including the name of the entity responsible for it and when and why it occurred. The more specific your claim is, the easier it will likely be for the insurance company to assist you.
Look For The Easement In The Property Records And Title Commitment
If your title company fails to see an easement that was subject to a contract between your home’s previous owner and a third party (e.g. the municipal government), this may create an issue. The most effective way to address this problem is by reviewing the property records. These documents typically show whether the easement was recorded in the county or if it is evident in the title commitment, which is essentially your title company’s pledge to issue an insurance policy for your home upon closing.
Assess The Terms Of The Easement
If the easement is temporary (e.g. project site, utility easement to build a sewer line, etc.), there will likely be little to no need for a dispute. However, if the easement is permanent, you should evaluate the terms and conditions that accompany it. It is especially important to do this if the easement (e.g. installation of equipment on or under your land) will lead to a significant reduction in your property’s value.
Seek Legal Advice
After you have assessed the terms of the easement, you should seek legal assistance. An experienced real estate attorney can offer you quality advice on how to proceed with your title insurance claim and any negotiations that arise from it. Your attorney can help you find answers to questions such as, “Who pays for the additional costs of handling the easement?” and “What are the requirements and the deadline for filing my claim?”
File A Claim
You may file a claim against your title company if the title policy fails to disclose an adequately recorded easement. It is often highly recommended that you submit a claim to the title company and then allow it to approach the seller. A reputable attorney can help you estimate the total amount of damages caused by the easement.
Anticipate Legal Action
Even if your claim is successful, you should know that title insurance contracts have schedules of exceptions and exclusions. For example, the title company may assert that the easement is not covered under your policy and that, consequently, the company’s refusal to pay out would not constitute a breach of contract. If you end up in such a situation, you can consult with your attorney and decide whether you wish to take your case to court.
You should also check the laws in your state concerning unrecorded easements. In any case, it’s good to remember that title insurance is generally valid for as long as you (and your heirs, if any) hold an interest in your property.
Contact A Title Insurance Expert
Reach out to the professionals at Mathis Title Company in Fairfax, Virginia, for more information on how to file a title insurance claim. We provide title insurance and legal advice to buyers, sellers, and lenders.
During the sale and purchase of a home, Mathis will hold the funds being transferred in an escrow account prior to title transfer and closing. After the title order has been approved, we will begin a title search and ensure a clean title transfer. We always work with trusted underwriting companies in order to issue an insurance policy. We provide both basic and extended owner’s policies; the latter provides protection against additional liabilities such as forged wills, previous ownership covenant violations, and structural damages.