5 Basics of Title Insurance Endorsements

Title insurance, in the form of owner’s and lender’s policies, has long been a mainstay of real estate practice.  As important as the basic policies, are the numerous endorsements available on forms approved by the American Land Title Association (“ALTA”).

Almost 80 different endorsements are available, some of which are included only in owner’s policies and some only in lender’s policies.  They cover such widely varying issues as zoning, covenants, encroachments, usury, subdivision, survey matters and environmental matters.

The price of each endorsement varies – some are issued for no cost, some carry nominal charges of $50 or $100, and some, such as zoning, can cost several thousand dollars.

Certain endorsements will only be issued upon satisfying specific requirements – the title insurer won’t typically issue a zoning endorsement, for example, unless it has received sufficient evidence that the property complies with basic use and dimensional zoning requirements.  However, such evidence is less extensive than would be required for a full-fledged zoning opinion letter.  For completed and occupied structures, the zoning endorsement has largely replaced the zoning opinion letter for most commercial lenders, representing a real cost savings for the property owner.

Some states regulate title insurance more than others and limit the types of endorsements that may be issued.  In Texas, for instance, a much smaller assortment of endorsements is available.

ALTA is constantly revising its endorsement forms and issuing new ones.  Most recently, on April 2, 2012, ALTA issued 16 new endorsements, focusing largely on energy projects and what is referred to as “land under development.”  At the same time, ALTA also revised several existing endorsements, including the widely used ALTA 9 endorsements governing covenants, conditions and restrictions and the ALTA 13 leasehold endorsements.

It behooves real estate attorneys and developers to familiarize themselves with the wide array of available title insurance endorsements since they can be a simple and relatively low cost way of addressing title, survey, zoning and other legal shortcomings of a particular property.