Title insurance is typically required for any real estate transaction where there is a transfer of ownership from one party to another. The purpose of title insurance is to provide financial protection in the case of contested ownership of a property. In other words, when multiple parties claim ownership of the property in question and have proof, the property cannot be sold until definite legal ownership is determined.
One issue that may arise when it comes to property ownership is a property line dispute. This occurs when there is a disagreement about where the property lines are located. These disputes can occur between buyers and sellers, owners and neighbors, or other parties who have a vested interest in the property and it’s boundaries.
Does title insurance cover property line disputes? The best answer is: it depends. Here’s how title insurance and property line disputes work.
Basic Title Insurance: What it Covers
A basic title insurance policy will typically cover the following issues:
- Invalid documents due to forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation
- Failure of any person or entity to have authorized a transfer or conveyance
- A document affecting title that is not properly executed, signed, witnessed, notarized, or delivered
- Undisclosed or unrecorded easements not otherwise apparent on your land
- No right of access to and from the land
- A document executed under a falsified, expired, or otherwise invalid power of attorney
- A document not properly filed, recorded, or indexed in the public records
- Ownership claims by undisclosed or missing heirs
- Defect arising from an improper prior foreclosure
- Undisclosed restrictive covenants affecting your property
- Lien issues can also cause title defects. Some examples of lien issues are:
- Any statutory or constitutional contractor’s, mechanic’s, or materialman’s lien for labor or materials that began on or before the policy date
- Lien for labor or materials furnished by a contractor without your consent
- A previous owner failed to pay a mortgage or deed of trust, a judgment, tax, or special assessment, or a charge by a homeowners or condominium association
- Other liens or claims that may exist against your title that are not listed in the policy
You’ll notice that property line disputes were not listed above in the policy coverage. Some policies even include a specific exclusion that denies coverage in boundary disputes. Most basic policies do not include this coverage, but you can purchase additional coverage that does.
Insurance Coverage for Property Line Disputes
Property line disputes are a different legal matter that is not part of the typical contested title issues that arise in real estate transactions. However, it can be a big enough problem to delay real estate closings and even prevent the transfer of property, which can result in financial losses for the parties involved.
To cover these potential losses you can purchase additional coverage that will include property line disputes should one arise. Area and boundary coverage includes:
- An adjoining landowner with improvements encroaching on to your buyer’s property
- An adjoining landowner claiming your buyer’s improvements protrude into their property
- Surveyor errors in locating improvements or the boundary lines of a property
- Fence lines not following the actual boundary lines of the property
- Improvements from your buyer’s property that sit into an easement or over a building restriction on the property
Area and boundary coverage that covers property line disputes is something your insurance provider may offer you when you are purchasing your title insurance policy. If it is not offered, be sure to ask, because this coverage may prove very useful if a dispute were to arise.
Need Legal Assistance with a Title or Property Line Dispute? Contact Kelly Legal Group
When it comes to title and property line disputes, it helps to have an experienced real estate attorney on your side. Title insurance coverage can be tricky without the help of a trained legal eye. Kelly Legal Group can make sure you get the coverage you deserve if an issue arises during or after you purchase property.