Are Title Insurance Companies Requesting Inspections?
I read the article below with great interest. In all my years in the Real Estate industry, I’ve never heard of a Title Insurance Company doing a physical inspection of the property itself, only investigating the legal history or the ‘paper trail’ of the property. I talked with my go-to advisors at Pioneer Title Agency and they were unfamiliar with the process, though their research revealed that it was not unheard of which leads me to believe that this is not yet happening here in Arizona.
By Barbara Pronin
Buying a home is a big decision so it’s important for the homebuyer to know exactly what they are purchasing. Once a homebuyer finds a home they love and escrow is opened, the title insurance company may request a property inspection. An inspection may detect and help avoid potential claims (benefitting the purchaser, lender, real estate broker and agent, and even the title insurance company itself) or litigation that could arise from issues that otherwise might not be uncovered until after the purchase of the home.
Common examples of the kinds of issues a typical inspection might uncover that could help avoid litigation include:
- Illegal garage conversions
- Non-code electrical wiring
- Outbuildings, such as sheds or illegally built “granny flats” that encroach on a neighbor’s land
- Gardens or irrigation systems that encroach on a neighbor’s land
- Concrete pads for recreational use that encroach on a neighbor’s land
- Front yards that have been illegally paved over to create parking space, violating zoning and building codes or community CC&Rs
- The use of private easement driveways/streets as unofficial parking lots or playgrounds
Other losses that can be avoided by completing a home inspection early in the transaction process involve situations regarding boundaries or incomplete data:
- Construction currently taking place on the property could result in mechanic’s liens
- You do not have the legal right to vehicular or pedestrian access to and from the land
- You are forced to remove an existing structure because it encroaches on a neighbor’s land or easement – or onto an easement or building set-back line
- Your neighbor builds structures after the policy date (excluding boundary walls or fences) that encroach onto the land
- The residence with the address shown in Schedule A of the preliminary report is not located on the land at the policy date
As your title insurance company, we know it is not uncommon for these kinds of situations to exist without the knowledge or consent of some of the participating parties. But ignorance of the law doesn’t excuse a violation – or avoid resulting litigation – making the request for an inspection both prudent and sensible.
Most inspections are done during workday hours, with no need for the inspector to enter the home. Appointments are rarely made unless there is a need to gain access to a gated community.
In most cases, homeowners are unaware that an inspection has even taken place. But if the owner is on the premises when the inspector arrives, and has any concerns about why the individual is there, it should be noted that bonafide inspectors always carry proper identification.
Barbara Pronin is an award-winning writer based in Orange County, Calif. A former news editor with more than 30 years of experience in journalism and corporate communications, she has specialized in real estate topics for over a decade. Reprinted with permission from RISMedia. ©2016. All rights reserved.
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