While optional in Georgia, purchasing owner’s title insurance is always a good idea and always recommended when acquiring real property. After all, why wouldn’t you want to protect your most valuable asset(s)?
What is Title Insurance?
As you probably guessed, title insurance protects the insured owner and/or lender from title defects. These defects can include, but are not limited to, issues affecting the chain of ownership of the property, adverse claims of third parties, and fraud or forgery. As a result of these potential defects, the owner and/or lender can suffer significant financial loss and potentially the complete loss of the property.
Most buyers know that title insurance is available for purchase when acquiring real property. However, buyers are often unaware that they have the option between a standard policy or an enhanced policy.
While there are many differences between the two policies, below are a few of the key differences to consider when deciding which policy option is best for you:
A standard policy insures against title defects that exist at the time a purchaser acquires the property. Put another way, a standard title insurance policy insures against adverse circumstances affecting the title that occurred at or prior to closing, including:
- Forged deeds, mortgages, satisfactions or releases of mortgages, and other instruments;
- Impersonation of the true owners of the land by fraudulent persons;
- Fraud, duress, or coercion in securing essential signatures;
- Mistakes in recording legal documents; and
- Unpaid recorded liens.
An enhanced policy provides the same coverage as a standard policy but also includes some additional protections against title defects that can occur after closing. For example, some of those additional protections include:
- Encroachments of structures on your property or of your improvements on a neighbor’s property;
- Subdivision violations;
- Certain zoning requirements;
- Lack of access to the property;
- Supplemental tax assessments;
- Post policy forgery, encroachments, adverse possession, prescriptive easements, and other clouds on title;
- Automatic increased coverage accounting for increasing property values; and
- Removal of the survey exception contained in the standard title policy.
An enhanced policy is generally about 10% more expensive than a standard policy. However, it also provides much better value for the cost. Ultimately, buyers should be aware of all options in order to make an informed decision they are satisfied with.
Brian Klein is an experienced associate with TOKN’s Real Estate team. If you would like to learn more about Brian and how he can help with your commercial and residential real estate matters, then please visit his profile here. Additionally, Brian is available by phone and email at the number and address listed above.