What is a Title Policy Endorsement?

Title insurance protects your property against loss when faced with unknown defects in your title. Title agents add endorsements to the policy to tailor it to the buyer’s and lender’s needs. Title policy endorsements are not used in the same context as what people are familiar with when it comes to using the term “endorsements.” These are not to be confused with ringing approval or sponsorships.

Title policy endorsements are managed by the American Land Title Association (ALTA). Periodically they revise their list of approved endorsements. The endorsements may be different for buyers and lenders, even though they are listed as the same number.

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When Would I Need a Title Policy Endorsement?

A title policy endorsement gives more power to the clear title. Title policies are form documents, so endorsements can stipulate special circumstances affecting the property. This is needed when titles are “clouded” (the true owner of the property is unclear) and/or subject to liens on the property or other encumbrances. When this occurs, title policy endorsements are often used to tailor the title to the situation and the needs of the insured. They can:

• Alter the exceptions, stipulations, and conditions of a basic title policy; and
• Correct or alter a previously issued title policy to make up for things that were misrepresented or left off.

Are Title Policy Endorsements Necessary?

Most lenders do require them on a Lender’s Title Insurance Policy. They can also be requested by the borrower. While buyers/borrowers don’t have a say on the endorsement on the lender’s policy, they can ask for an endorsement not to be included on their policy. While you don’t want to leave yourself unprotected, each endorsement is another charge and this may not fit into your budget. Be as discriminate as you like with the things you do have a say on.

There are nearly 100 endorsements but the most common you’ll see in real estate transactions are endorsements regarding condos, reverse mortgages, environmental stipulations, and planned unit developments.

Why Would I Care About Endorsements?

In addition to them providing greater coverage tailored to your needs, each endorsement adds cost to your policy. Depending on your underwriter you can expect the endorsements to run between $25-75 each.

Endorsements are also contingent on the state in which your sale is taking place and what the lender requests. For this reason, you want to select someone who has the credentials and the knowledge to work on a national level with a broader understanding of endorsements.

The title company will be told by the lender what lender-specific endorsements must be added. Checking with the lender ahead of time, or the title company once it receives the list, will give you greater knowledge into what the cost will be for your title insurance policy.

If you would like increased visibility into the title policy endorsement addition, choose a partner you can trust. Contact Bay National Title Company today. Our expertise and strong communication skills will prepare you for what’s needed in your real estate closing.