Thursday, July 19, 2007

query: does title insurance cover appraisals

No, title insurance does not cover appraisals. The appraisal is an assessment or opinion of value. Title insurers do not insure value, they insure the marketability of title and defined ownership of the real property.

While we're on the subject, it's important to know that title insurance also does not cover the condition of the structures. We often get calls from consumer who have had water problems in the basement after their first big rain or the furnace doesn't work, you name it.

When buying real estate, there are numerous real risks, many of which you can insure. You can buy mine subsidence insurance, hazard insurance, a home warranty, and title insurance. You can also have the house vetted by a home inspector and you can have the land surveyed.

You or your mortgage lender will have the value considered by an appraiser. The mortgage lender will check flood maps.

Each and every one of these steps helps to reduce potential risk but can't eliminate all risk. So, if you find later that the value of the property can't be supported or you find six inches of water in the basement, these are risks not covered by title insurance. It could be just chalked up to bad luck with the market or the movement of the water table. If you suspect foul play, you may wish to consult an attorney.

No comments: