By Jones Osborn II

Anyone purchasing real estate knows they should obtain a policy of title insurance. A standard owner's policy guarantees the buyer (subject to certain exclusions and exceptions) that he will have marketable title, that there will be no undisclosed liens or encumbrances, and that the property will have access to a public road. Extended coverage, which can be purchased at additional expense, deletes certain of these exclusions and furnishes even broader coverage.

Nevertheless, there are still a number of things that aren't covered, even with extended coverage. To protect against these things, special endorsements are available. These endorsements are rarely offered by the title insurance company on their own; usually, they must be specifically requested. Since you can't request what you don't know about, it is useful to review some of these endorsements.

Some of the more common ones are:

Zoning. This endorsement guarantees that the property has a specified type of zoning and that certain listed uses are allowed on the property. It also insures against losses arising out of the failure to meet minimum lot sizes or dimensions, the failure to comply with floor area restrictions, the failure to comply with setback lines, and the failure to comply with height restrictions. (Sometimes referred to as an LTAA 17; CLTA 100.17; or ALTA 3.1 endorsement.)

Violation of Deed Restrictions. This endorsement protects the owner against losses arising out of existing violations of any covenants, conditions or restrictions recorded against the property. (CLTA 100.5.)

Street Abutment. This endorsement insures that the property abuts and has access to a specified physically open street. Although the standard policy insures the owner that he has access to some street, it is often important to know that he has access to a particular street. For example, a parking lot may abut a particular street, or the property may need access to a particular street for business reasons. In such cases, this endorsement can provide valuable protection. (CLTA 103.7.)

Non-imputation. An owner's policy of title insurance normally excludes coverage for matters known to the insured but not disclosed to the insurance company. This can cause a problem where the insured does not have actual knowledge, but the knowledge is imputed to him by operation of law. An example is where one partner in a joint venture is also the seller of the property and has knowledge of an undisclosed title problem, but the remaining partners and the venture itself do not. In this case, the endorsement would provide protection to the remaining partners regardless of the fact that under applicable law this knowledge would otherwise be imputed to the joint venture, thereby voiding coverage with respect to the undisclosed defect. (CLTA 107.6.)

Same Property as Shown on Survey. This guarantees that the insured property is exactly the same property as that described on a specified survey. It eliminates any risk that the survey inadvertently describes the wrong property. (CLTA 116.1.)

Contiguity. Where the purchaser is taking title to two or more parcels of adjacent property, this endorsement provides a guarantee that the parcels are contiguous and that there are no strips or gaps between them. This is especially useful if the property is to be developed with a single building spanning the two parcels, or is otherwise to be used as an integrated whole. (CLTA 116.4.)

Patent. This endorsement protects the owner against any damage to his improvements arising out of any exceptions shown in the patent; for example, the right to remove minerals. (Special Endorsement No. 5.)

Special Extended Owner's. This endorsement, which is available only with an extended owner's policy, offers a variety of protections, including assurances that there are no present violations of any covenants, conditions and restrictions and that there are no encroachments from adjacent properties or onto adjacent properties, and insuring against losses to improvements, including lawns, shrubbery or trees, arising out of the use of a specified easement across the property or the extraction or development of minerals from the property pursuant to a mineral reservation. For example, if an underground power line easement must be dug up, this endorsement would cover damage to any improvements or landscaping destroyed or damaged as a result.

A number of other specialized endorsements are also available covering a large variety of situations. For example, there is an endorsement available which protects a property owner with an easement across another's property from the risk that the easement will be lost due to the failure of the owner of the other property to pay his property taxes. There is an endorsement that guarantees a purchaser of land that he can increase his coverage when he develops the property, even if pre-existing title defects are discovered in the meantime. Other endorsements are available to cover special risks related to condominiums, to increase coverage to keep up with inflation, or to insure the holders of mortgages or deeds of trust against certain kinds of title risks.

Some title companies are also willing to draft custom endorsements to meet the purchaser's needs when a standard endorsement is not available.

Many endorsements can be obtained at nominal cost, and in some cases, without any charge at all. In other cases, they are individually priced when requested to reflect the specific risk insured against. Obviously, the greater the perceived risks, the higher the premium.

Conclusion. Title insurance endorsements can provide specific protections against risks not otherwise covered by a standard, or even an extended, owner's policy. Often, the need for these endorsements can be determined from a close reading of the preliminary title report or survey. In other cases, the risk can be recognized by a knowledgeable purchaser or his counsel. Generally, the cost of a special endorsement is very reasonable and should at least be considered whenever a non-covered risk is recognized.