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Today’s Homeowner Title Policy: Broken Down
New homeowners want to focus on buying new furniture or choosing paint colors, and not worry about having to pay a debt left behind by a previous owner. An owner’s title insurance policy protects the homebuyer for as long as they, or their heirs, own the property.

The common Homeowner’s Title policy has five sections: covered risks, the exclusions from coverage, Schedule A, Schedule B and the conditions.

Covered Risks. This section lists the kinds of risks the policy insures against. However, the policy makes it clear that the insurance of the listed risks are subject to: (1) the Exclusions listed following the Covered Risks; (2) any exceptions listed in Schedule B; and (3) the Conditions. In the current American Land Title Association (ALTA) owner’s policy, there are ten covered risks listed in the policy, including:
  1. The risk that someone else owns your property
  2. That there is some defect or encumbrance on your title caused by fraud or forgery
  3. Any liens for real estate taxes or assessments that are due but unpaid
  4. That your title is unmarketable, that is, you are unable to sell your property to a purchaser because of a title defect
  5. Right of access to and from your land
Exclusions. Exclusions limit the coverage of the policy. They deal with issues that are outside the control of the title company. The ALTA owner’s policy contains five exclusions, which include matters such as governmental regulations on the land and eminent domain. The policy does not insure against any defect or title issue that is created or attached to the property after the date of the policy.

Schedule A. Schedule A sets forth the specific information on the title and policy such as the date of policy, the amount of insurance, the insured, the legal description of the land insured by the policy and the estate insured, such as fee simple or leasehold. Schedule A must be attached to the policy for the policy to be valid.

Schedule B. Schedule B lists the various exceptions to the title that the title company found when it performed its title search. Common exceptions could be prior unreleased mortgages on the property, easements, taxes, restrictions on the use of the property and any other limitations on the title. By listing various items as exceptions, the title company is telling the insured that these items are not covered by the title policy, and that the title company will not pay a claim or defend against a claim based on these excepted items.

Conditions. This section provides important definitions of policy terms and outlines the relationship between the insured and the title company. The Conditions describe the rights of the title company to pay or settle the claim, and the determination, extent and limitation of liability.

It’s good to review the standard owner’s policy or ask your title representative about what is included in the policy when purchasing a new property.

Adapted from an article on

This material is not intended to be relied upon as a statement of the law, and is not to be construed as legal, tax or investment advice. You are encouraged to consult your legal, tax or investment professional for specific advice. The material is meant for general illustration and/or informational purposes only.  Although the information has been gathered from sources believed to be reliable, no representation is made as to its accuracy. 


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