Escrow Thursday: Why Do Some Title Reports Call For an Inspection?

Why do some title reports call for an inspection?
When a title company inspects, which is about 15-25% of all sale orders, they look for the following:
A. Evidence of recent improvements (thus, potential mechanic’s lien rights)
B. Evidence of encroachments
C. Evidence of parties in possession
D. Evidence of unrecorded easements
E. Evidence of anything else that might impair title coverage
The inspection is “triggered” if:
–  Tax values jump significantly (thus 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 is a sale/refi/construction loan of new construction or new subdivision

The title company pays for the inspection, and does not usually pass the cost on to the customer.  If the title company does 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 a pretty accurate snapshot of the above issues. To find out definitively, the client would need a survey.

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