Did you know that title companies inspect properties?
This is the case roughly 35% of the time we are asked to issue title insurance.
When you see the following title special exception on your title commitment, you should know that an inspector will be coming to the subject property.
“Matters relating to the questions of survey, rights of parties in possession, and unrecorded lien rights for labor and material, if any, the disposition of which will be furnished by supplemental report.”
Some of the things the inspector looks for are:
- Recent improvements on the property
- Rights of parties in possession
- Any other matters that would disclose a title defect that are not disclosed in the public records.
The inspection is usually ‘triggered’ if:
- Tax values jump significantly (potential new improvements)
- The property has not been insured in many years
- We are told there is an encroachment/potential encroachment
- There is a recorded survey disclosing potential matters listed above
- It involves new construction or a new subdivision
The title insurance company pays for the inspection and does not pass the cost on to the customer. If they do not inspect, and something that is covered would have been disclosed in an inspection, they are usually responsible for it. The inspection is not a survey, but it is a pretty accurate snapshot of the above issues. To find out definitively, the client would need a survey.
If you ever have questions regarding property inspections, surveys or other title matters, your title officers are more than happy to answer them!