Everything You Need To Know About Title Endorsements

If you’re in the market for a home, you’re probably familiar with title insurance, as mortgage lenders almost always require it to close your mortgage. But not everyone knows what a title endorsement is, or why it’s wanted or needed.

What Is A Title Endorsement?

“Title endorsements expand the coverage of a standard homeowner’s title insurance policy, usually either by removing exceptions to the standard policy or by adding coverage specific to the property’s situation,” says Elizabeth Whitman, attorney-at-law with Whitman Legal Solutions in Potomac, Maryland.

“While a standard title insurance policy will protect against many common title issues, such as recorded liens not listed on the policy, errors in the deed or fraudulent deeds, title endorsements cover more specialized issues,” she says.

What Are The Two Kinds Of Title Endorsements?

There are two kinds of endorsements.

“First, the lender’s underwriters have certain requirements to underwrite a loan, which are determined by the lender,” says Eric Klein, principal attorney and president at Klein Law Group in Boca Raton, Florida.

Second, in addition to the underwriter’s required endorsements, the borrower might request to add certain endorsements to a policy.

While the American Land Title Association regulates and sets guidelines for the different types of endorsements on a national level, each state has its own land title association, which might have additional requirements.

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What Types Of Title Policy Endorsements Are Most Common?

Title endorsements can cover a wide variety of issues, many of which will be specific to your state or region. Here are some of the more common endorsements for owners of residential properties.

Access And Property Endorsements

Property and access endorsements ensure that the property is accessible and its boundaries and relationships to neighboring properties are well defined.

Indirect Access And Entry

This ensures the owner will have access to the property from a public street.

“The indirect access and entry endorsement is important when the property is not adjacent to a public street or depends on an easement over someone else’s property for access to the road,” Whitman says.

Survey Coverage

Survey coverage endorsements are important for resolving discrepancies between the property’s legal description and the physical survey of it. A survey coverage endorsement protects the property from losses from boundary disputes or inaccuracies in the recorded dimensions.

Contiguity

A contiguity endorsement ensures that properties with multiple parcels have no unseen gaps or intervening parcels. This is vital for properties assembled from multiple lots, or for otherwise large properties.

Physical And Subsurface Endorsements

Subsurface and physical endorsements address problems with the property’s physical state, like encroachments, easements and subsurface conditions.

Encroachments And Easements

These have to do with how certain structures are situated on your property. For example, if your garage was built too close to the property line, and the eaves overhang into the neighbor’s yard, the title company will endorse encroachment or easement and provide coverage for losses in case a future neighbor demands you move the structure.

Minerals And Subsurface Rights Endorsement

Minerals and subsurface rights endorsements protect property owners from potential losses if the development or extraction of subsurface materials, like gas or oil, lessens the property’s value. In areas with high amounts of mineral activity, this is particularly relevant.

Land Use And Compliance Endorsements

Compliance and land use endorsements are especially important, ensuring that the property’s use aligns with local zoning laws, environmental regulations, and all recorded covenants, conditions and restrictions.

Covenants, Conditions And Restrictions Endorsements

This endorsement generally provides coverage for owner losses from violations of restrictive covenants. For example, perhaps local zoning regulations allow you to build a second accessory unit on your property. However, when the property was subdivided, the subdivision plat included a restriction that said only one structure can be built on the lot. In that case, you wouldn’t be able to build that second unit unless a CCR endorsement is obtained.

Zoning And Environmental Lien Endorsements

Zoning endorsements offer protection against value losses from zoning violations that may restrict property usage.

Environmental liens provide coverage to property owners for past use of their property that violated environmental laws. This is especially important in ensuring that the current property owner is not penalized for a previous owner’s violation.

Do You Need A Title Endorsement?

No, in many cases, a title endorsement is not required. Whether you truly need a title endorsement depends on a few factors. The most important factors involve specific risks with your property as well as your comfort level with potential uncovered issues.

Standard policies cover common problems. If your property is located in a place with few notable risks, you may not need an endorsement. But for properties with zoning issues, easements, encroachments or other unique features, endorsements provide an additional security blanket.

How To Get A Title Endorsement

Follow these steps to ensure you’re protected when getting your title endorsement.

1. Review Your Preliminary Title Report And Consult With Your Lender

Upon opening escrow, you should receive a preliminary title report. Review it thoroughly to understand the current state of your title so you can identify any existing issues or limitations.

Since lenders often require specific endorsements as part of their loan conditions, discuss which endorsements they consider essential for your loan package. If you and your lender disagree on which endorsements are most important, consider getting a second opinion from an unbiased third party like a title company.

2. Decide On Necessary Endorsements

The endorsements you’ll need will be determined based on your property type, location and your specific concerns.

The most crucial endorsements to consider include:

3. Request Endorsements From The Title Company

Once you have a list of desired endorsements, share your finalized list with your title company. After receiving it, the title company should be able to advise on any additional endorsements that might be beneficial based on your specific property and transaction details.

4. Review Costs And Close Escrow

Title companies will provide a quote for adding endorsements to your policy. Review these costs and understand the coverage they provide.

Once you’ve made your decisions, the title company will add the endorsements to your title policy. Make sure you receive updated documentation reflecting these changes.

With the endorsements in place, proceed to close escrow. Your updated title insurance policy will be issued shortly after the closing.

Title Endorsement FAQ

Learn more about title endorsements with answers to these frequently asked questions.

The Bottom Line

Title endorsements can be extremely useful for homeowners who are concerned that their title insurance policy won’t provide sufficient coverage if certain issues already exist or arise in the future with their property. If you’re wondering whether you would benefit from incorporating more specialized protections into your policy, get in touch with your title company or a real estate attorney to learn more about what your best options would be.

Interested in learning more about title insurance? Check out how to file a title insurance claim here.