The Difference between Standard and Enhanced Title Insurance Policies
Buying a home is often the biggest investment of a person’s life. Insuring a property’s title protects the new owner’s rights and helps them avoid expensive fees if anyone questions the legality of their ownership. Although homeowner’s title insurance is not required, it can save them thousands of dollars should any title defects come up while they own the home.
Lenders will require that a borrower have a lender’s policy, but there are two types of title insurance policy options for soon-to-be owners: Standard and Enhanced.
Standard Title Insurance
A Standard Owner’s title insurance, also referred to as basic or limited, provides basic coverage to homeowners and lenders, such as:
- Any defect in or lien or encumbrance on the title
- Unmarketability of the title (i.e. the inability to transfer ownership)
- The lack of right of access to and from the land
- The removal of existing structures due to encroachment onto an easement on neighbor’s land, easement, or building set-back line
Enhanced Title Insurance
Enhanced Homeowner’s title insurance, also referred to as ALTA Homeowner’s title insurance, includes all of the coverage of the Standard policy plus protection against additional risks such as:
- Lack of vehicular and pedestrian access to and from the land, based upon a legal right
- A taxing authority assesses supplemental real estate taxes not previously assessed against the land for any period before the policy date because of construction or a change of ownership or use that occurred before the policy date
- A neighbor builds a structure after the policy date that encroaches onto the land
- The title is lost or taken because of a violation of any covenant, condition, or restriction that occurred before you acquired the title
- Someone tries to enforce a discriminatory covenant, condition, or restriction that they claim affects your title, which is based upon race, color, religion, sex, handicap, familial origin, or national origin
Download SMART’s free Standard vs Enhanced Policies one-pager to closely compare both options.
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For additional information on this topic contact Evelyn Miller, Partner, at 202-753-7400.
