The Enhanced Policy
The Enhanced Policy
For residential home buyers purchasing an Owner’s Title Policy, there is an option to purchase a policy with standard coverage or a policy with enhanced coverage. The Enhanced Owner’s policy, also known by Stewart and Fidelity as the Homeowner’s Policy and by First American as the Eagle Owner’s Policy, offers additional coverage for buyers of residential property. Keep in mind that the Enhanced policy can only be issued to a natural person or the trustee of a Trust on residential 1-4 family completed structures. Unfortunately, it cannot be issued to any type of corporation or organization and cannot be issued on vacant land or any other land classification other than residential.
The Enhanced Owner’s policy includes all of the protections provided under the standard ALTA policy plus additional protections and benefits. The additional covered risks for the Insured include mechanics liens that belong to someone else, unrecorded liens by a homeowner’s association, false impersonation of the true owner of the property, forged deeds, releases or wills, undisclosed or missing heirs, instruments executed under invalid or expired Power of Attorney, mistakes in recording legal documents, deeds by minors, deeds by persons supposedly single but in fact married, liens for unpaid estate, inheritance, income or gift taxes, and fraud, and several other additional benefits explained below:
The Enhanced Policy's Additional Benefits
The Enhanced policy protects homeowners against claims arising both before and after the policy date. The Homeowner is covered if someone else has an interest in or claims to have rights affecting the title or if the title is defective. Post-Policy protection includes coverage for forgery, easements by prescription, encroachments built by neighbors after the policy date and adverse possession.
Expanded Access Coverage
The Standard Owner’s Policy does not define the type of access a homeowner has to the property but the Enhanced policy specifically insures both actual pedestrian and vehicular access, based upon a legal right.
Building Permit Violations:
Subdivision Law Violations:
If a homeowner cannot obtain a building permit or is required to correct or remove a violation, due to an existing violation of a subdivision law or regulation affecting the Land, the Enhanced Policy protects the homeowner up to $10,000.00, for a deductible of either 1% of the Policy Amount or $2,500.00 (whichever is less).
Zoning Law Violations:
If the homeowner must remove or remedy their existing structures or any part of them, because they violate an existing zoning law or zoning regulation, the Enhanced Policy covers up to $25,000.00 for a deductible of either 1% of the Policy Amount or $5,000.00 (whichever is less).
Encroachment Protections:
The Enhanced Policy covers homeowners up to $5,000.00 if they must remove an existing structure because it encroaches on a neighbor’s land, including encroachments of boundary walls or fences, for a deductible of either 1% of the Policy Amount or $2,500.00 (whichever is less).
Water and Mineral Rights Damage:
If a homeowner’s existing improvements, including lawns, shrubbery and trees are damaged because someone exercised their right to use the surface of the land for the extraction of minerals or water, the Enhanced Policy provides coverage.
Supplemental Tax Lien:
The Enhanced Policy protects homeowners if a supplemental tax lien is filed and assessed against the property because of new construction or a change of ownership prior to the policy date.
Continuous Coverage:
Even if the homeowner no longer holds the title to the property, the Enhanced Policy insures anyone who inherits the title because of the homeowner's death and the spouse who receives title after a dissolution of marriage. The Enhanced policy allows homeowners to transfer title to their home into a trust/estate planning entity after the policy date and will receive uninterrupted coverage at no extra cost.
Value Added/ Automatic Inflation Protection:
The Enhanced policy has clear benefits for buyers and comes at a cost not much higher than the standard policy. Don't hesitate to contact our office for more information about the Enhanced Policy.