This Week's Question

December 5, 2005

By Nena Groskind

Q:   I purchased a property more than a year ago but just discovered that the property description, erroneously, excluded a section of land that should have been conveyed. Will the title insurance policy for which I paid at the closing cover 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 paid 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 handled 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. The attorney’s certification also won’t cover the legal expenses you incur in asserting your claim. An owner’s title policy would cover both your legal costs and any losses you suffer if your claim is rejected.