Ask a Realtor: How do you get a title company to remove exceptions on land? (column)
Ask a Realtor
Dear Joan: We are buying a lot to build on this spring and all is going well except that now we are told that the title company is requiring a survey for which we will have to pay. I guess they said we would not have to pay for a survey if we were willing to settle for coverage that’s not as good on our title policy, whatever that means (OEC Coverage?). Also, they are calling it a survey, but they are saying what they actually want is an Improvement Location Certificate (ILC), which doesn’t even locate the corners of the property. Is this a common occurrence? Is there something odd about our lot that they are requiring this? Thanks for any insight you can provide. — Slightly Confused
Dear Slightly Confused: Your question is very timely because we seem to be dealing with this more and more on vacant land. We always deal with it on an improved property (lots with houses on them). It all starts with the request for Owner’s Extended Coverage (OEC) in paragraph 8.1.3 of the Contract to Purchase. The price is minimal to get the coverage (usually under $100) and it removes the standard “exceptions” on the policy.
“Exceptions” are items that the title company “excepts out” as in, does not give coverage for. Therefore, the more “exceptions” you remove, the more coverage you get. The confusion comes in on how you get the title company to remove the exceptions. They can require an ILC, which is an Improvement Location Certificate, done by a surveyor, showing if there are any encroachments on the property you are purchasing. For instance, the neighbor could have built something that has a roof or patio or whatever, hanging over onto the property you are buying. We actually found a whole barn that had been accidentally built by the neighbors on a property we were selling. They went off a “curve” pin in the road that they thought was a corner pin and it had been there for years.
We normally consider a lot that has vacant lots next to it, as a lot that would not need an ILC, as it is obvious to the naked eye that there are no encroachments because there are no buildings on either side. However, if the title company’s examiners “Google” the lot and see a trail or a ditch or anything they think could be an issue, they will insist on an ILC to remove the exceptions. As Brokers, we always recommend that you get the extended coverage and we recommend that you do a survey and/or an ILC to get your maximum coverage. Hopes this helps you. Best of luck to you!
Joan Harned is an owner and broker for Keller Williams Mountain Properties and heads up Team Black Bear, her own real estate team. Harned has been selling real estate in Eagle County for 27 years. Contact Harned with your real estate questions at joan@team blackbear.com, 970-337-7777 or http://www.skiandteehomes.com.