Title Endorsements: What They Are And When You Need Them

As a homeowner, the house title confirms that you legally own your property. When you sell your home, the title shows the buyer that you have the legal right to sell it. When you purchase a new home, the title transfers to your name, giving you the legal right to own and, eventually, sell the home.

Sometimes there can be an issue with the title that may not come up right away. To help protect the homeowner and mortgage lender’s investment, title insurance is there to help cover damages or losses from certain claims filed against the title.

A title endorsement takes protection a step further. Wondering if you should get a title insurance endorsement? It may be worth it to take on the extra insurance coverage.

What Is A Title Endorsement?

Title insurance endorsements add additional protection by modifying some exceptions or adding property-specific coverage to your current title insurance policy. In other words, title endorsements provide coverage beyond a home buyer’s standard title insurance policy. With nearly 100 title endorsements available, selecting the right endorsement can prevent costly expenses and even the loss of your home.

How Much Is The Title Endorsement Fee?

A title endorsement fee typically costs up to $75, on average, though some may cost more. However, the cost will depend on the underwriter and the state in which the sale is taking place. While states have some of their own unique requirements (such as cost), it’s the American Land Title Association (ALTA) that regulates and sets national endorsement guidelines for the different types of endorsements.

Types Of Title Endorsements

There are close to 100 types of real estate title endorsements available to borrowers and lenders. You don’t need to add all endorsements to your policy; you can pick and choose them to customize the coverage so that it fits your specific property and situation.

Some endorsements are offered to both the owner’s policy and loan policy, while others are not. In some cases, the lender may purchase some endorsements or require you to purchase the endorsements. In other instances, you may choose to purchase a selection of title endorsements on your own. Below are a few common title endorsements to consider.

Easements And Encroachments

Endorsements for easements and encroachments protect against loss and damage if there’s an encroachment or easement violation that results in the removal or alteration of the homeowner’s property. For example, if the homeowner must tear down a fence that crosses into the neighbor’s yard because the new neighbor demands it be removed, an encroachment endorsement will cover the loss.

Minerals And Subsurface Substances

This type of endorsement covers damage or loss if the home must be altered or removed because an existing right allows an entity to use the land for the extraction or development of certain minerals or other substances. For example, if someone owns the minerals under your land and that mineral owner wants to extract them, this endorsement will cover the loss or damage incurred from the extraction practices.

Survey Coverage

Survey coverage protects the property when there is a discrepancy between the endorsement and title insurance policy when identifying the land that’s insured. It covers the homeowner or lender if the land identified and insured in the insurance policy is not the same land identified on the land survey in the endorsement.

Access And Entry

The access and entry endorsement helps ensure the homeowner has a way to get to a public road, even if their property doesn’t touch the road directly. This endorsement protects against loss or damage if they do not. In such cases, the homeowner usually relies on an easement by necessity, which allows them to use a neighboring property to get to the road.

Zoning

A zoning endorsement helps protect from loss or damage caused by a court ordering the homeowner to alter or remove the home. It also protects the homeowner if a court prohibits them from using the home for a specific purpose because it violates a specific zoning law.

Contiguity

The contiguity endorsement is common for insured land that contains multiple parcels that make up one property. This type of endorsement ensures there are no other parcels or gaps that intervene and cause the insured parcels to become detached from one another. It covers any loss that occurs when the insured parcels are not adjoining – or touching one another – because there are other parcels, gaps or irregularly shaped parcels separating them.

Covenants, Conditions And Restrictions (CC&Rs)

The CC&Rs title policy endorsement provides coverage for losses resulting from a violation of certain covenants, conditions and restrictions that affect real property.

These could include limitations on land use, architectural guidelines or requirements to pay fees for upkeep of common areas within a planned unit development. If you live in a condominium complex with a homeowners association (HOA), for example, you’ll likely have to follow the guidelines outlined in a restrictive covenant. This agreement limits how property owners can use their homes.

Environmental Protection Lien

This title policy endorsement is a specialized coverage option that protects home buyers against losses that result from the enforcement of environmental protection liens against the property.

These liens could arise when a residential property or piece of land is found to be contaminated or environmentally hazardous, and a government agency or third party places liens on the property to ensure cleanup costs are taken care of.

The environmental lien endorsement ensures that buyers aren’t responsible for potential environmental issues that may arise after they purchase the house or land.

Future Advances

The future advance title endorsement is an extra layer of protection for mortgage lenders. It provides security if the lender makes additional loans to the borrower in the future, where the borrower’s original mortgage is secured by the same property.

In other words, if you, as the borrower, need to take out more money in the future and use your property as collateral again, this endorsement ensures that the new loan is also protected.

The future advance endorsement ensures that the lender’s right to the property is safe, even if you borrow more money against the property later on.

Who Needs A Title Insurance Endorsement?

Most title insurance policies will cover many common needs. However, some properties – due to their location or other features – may require additional coverage. The additional coverage needed will depend on the property.

To help you gain insight into the types of endorsements you may need to get, talk to your lender. They will most likely have more of a stake in the property in the beginning, depending on how much you borrow, and so will want to protect their investment. Whatever endorsements your lender gets, you may want to consider getting the homeowner version. Many title endorsements are available to both the lender and the homeowner.

While following the lender’s lead is helpful, the best way to be sure you’re getting the right endorsements for your property is to consult with an attorney or contact the title company directly.

The Bottom Line

Title endorsements add additional protections against loss or damage to a property under special circumstances. With close to 100 endorsements to choose from – and help from an attorney or title company – a homeowner can build a protection plan that’s more custom fit to their unique home.

Title insurance and title endorsements are just some of the costs you’ll often need to pay when buying a house. Are you ready to take the next step in home buying? Start your application today to see how you qualify.