This Week's Q & A

This Week's Question

August 16, 2004

By Nena Groskind

Q: I recently purchased a lot and discovered that, because of an error in the property description, an adjacent parcel, which was supposed to be included in the transaction, wasn’t properly conveyed. Will the title insurance policy cover me if I’m unsuccessful in asserting my claim?

A: Not unless you purchased an owners’ title insurance policy in addition to the lender’s policy, for which you were required to pay. Even though you pay the premium, as part of your general closing costs, the lender’s title policy, as the name suggests, only covers losses the lender incurs as the result of title problems. That policy doesn’t provide the buyer with any benefits at all. The conveyancing attorney (that’s the attorney who quarterbacked the closing) is required to certify title to the borrower, but only up to the amount of the certification provided to the lender, which, typically, is the amount of the mortgage. That means if you lost the property entirely in a title dispute, you would not be able to recover your down payment. Also, the attorney’s certification won’t cover the legal expenses you incur in defending your claim, which is coverage an owner’s title policy would provide.