Sometimes, a Florida title insurance policy can protect you from a property boundary dispute. But it's important to recognize that a standard policy may not cover these common issues.
Many property line conflicts are hidden from the public record and only become apparent after you've purchased your home. For a homeowner in Florida, discovering a fence, driveway, or even part of a building encroaches on your property can be a significant source of stress and financial strain. These situations escalate quickly, turning a simple misunderstanding into a complex legal battle with your neighbor.
Understanding the fine print of your title insurance policy before a dispute arises is one of the most important parts of purchasing real estate. Below, we’ll explain what title insurance does and does not cover regarding boundary issues and what steps you can take to secure your investment.
As a firm with a Board Certified in Real Estate Law attorney, Lulich & Attorneys understands the complexities of Florida property law. If you are concerned about a potential boundary issue or are in the middle of a dispute, call us at (772) 589-5500 to discuss your situation.
What Is Title Insurance? A Foundational Guide for Homeowners
In simple terms, title insurance is a policy that protects you, the property owner, and your lender from financial loss caused by defects in your property's title. A property "title" is your legal right to own and use the property.
Title insurance is different from homeowners insurance:
- Homeowners insurance protects you from future events like fire or theft
- Title insurance protects you from issues in the property's past
What is a "Title Defect?"
Title defects are legal problems with the ownership of your property that could threaten your claim to it. A title company conducts a thorough search of public records before you close to find these issues, but some can be missed. Title insurance is your protection against these undiscovered problems.
Common defects include:
- Undisclosed Liens: A previous owner may have left unpaid debts. Creditors, such as contractors (mechanic's liens) or government bodies (tax liens), can place a legal claim on the property to secure payment.
- Public Record Errors: Clerical or filing mistakes in deeds, mortgages, or other public documents.
- Fraud or Forgery: A past deed or document might have been signed illegally or under duress. This includes instances of false impersonation, where someone pretends to be the owner to sell the property.
- Unknown Heirs: Someone with a previously unknown claim to the property, like a missing heir from a deceased owner, could come forward and contest your ownership.
How It Works
The process begins before you finalize your home purchase. A title insurance company or your attorney examines public records—deeds, mortgages, wills, court judgments, and tax records—associated with the property. This search is designed to identify and resolve any title defects. For example, it might uncover an outstanding mortgage that needs to be paid off or a lien that must be cleared before the property can be transferred to you.
Claims are relatively uncommon precisely because the title company does this extensive work upfront to prevent future issues. A significant portion of your premium pays for this preventative search and resolution process. The insurance policy is then issued to protect against any hidden hazards that the search did not uncover.
One-Time Premium
A key feature of title insurance that sets it apart from other types of insurance is the payment structure. You pay a one-time premium at the closing of your real estate transaction. There are no ongoing monthly or annual fees. This single payment provides coverage for as long as you or your heirs own the property, offering long-term peace of mind.
Not All Policies Are Created Equal: Standard vs. Owner’s Policies
When you purchase a property with a mortgage, you will encounter two different types of title insurance. Though they may sound similar, they protect different parties and serve distinct purposes. It is very important to understand the difference to ensure your own investment is secure.
Lender's Policysur
A lender's title insurance policy is almost always required by the mortgage company as a condition of the loan. As its name suggests, this policy protects only the lender's financial interest in the property. It ensures the lender's mortgage is a valid lien that takes priority over other claims. The coverage amount of a lender's policy decreases over time as you pay down your loan balance and eventually terminates once the mortgage is paid in full.
Owner's Policy
An owner's title insurance policy is purchased for your protection. It insures your financial investment, or equity, in the property. If a covered title issue arises after you have purchased the home, the owner's policy will cover the legal fees to defend your ownership rights and any financial loss incurred up to the policy's face value, which is typically the purchase price of the home. Unlike a lender's policy, an owner's policy protects you and your heirs for as long as you have an interest in the property.
The Critical Distinction
While a lender's policy is mandatory for most loans, an owner's policy is technically optional. However, choosing not to purchase an owner's policy leaves your investment completely exposed.
If a title dispute emerges, the lender is protected, but you would be responsible for paying your own legal bills and could potentially lose your home and all the money you have put into it.
The "Survey Exception": A Common and Costly Gap in Title Coverage
One of the most significant limitations in a standard owner's title insurance policy is the "survey exception." This is a standard clause that states the policy will not cover problems that an accurate and up-to-date survey of the property would have revealed. In other words, if a boundary issue could have been identified by physically inspecting and measuring the land, the insurance company can deny the claim based on this exception.
This exception is the primary reason why a standard title insurance policy often fails to protect you from boundary disputes. Because most encroachments and property line disagreements are visible on a survey, they fall directly into this coverage gap. The insurer’s position is that the buyer had the opportunity to discover the issue by obtaining a survey before closing.
Common Issues Excluded by the Survey Exception
The survey exception leaves homeowners exposed to several common and stressful property line problems. Such issues include:
- Encroachments: This is when a structure on a neighboring property illegally extends onto your land. Examples include a neighbor’s fence built a few feet over the line, a driveway that partially crosses onto your property, or even a corner of a shed or garage.
- Boundary Line Disputes: These conflicts arise when you and your neighbor have different beliefs about where the property line is located. This can be due to conflicting old surveys, ambiguous legal descriptions in deeds, or misunderstandings about landmarks.
- Overlaps or Gaps: Sometimes the legal descriptions of two adjoining properties can overlap, meaning both deeds appear to include the same piece of land. Gaps are the opposite, where a strip of land between two properties appears to be owned by neither.
Why This Matters
This exception is a major vulnerability for homeowners. A boundary dispute can be incredibly expensive, often requiring new surveys, attorney fees, and sometimes even real estate litigation to resolve. Discovering that your neighbor's new patio is partially on your land can devalue your property and make it difficult to sell. Without specific coverage for these matters, the financial burden of resolving them falls entirely on you.
How Can You Get Coverage for Boundary Line Issues?
Given the significant gap left by the standard survey exception, how can a Florida homebuyer ensure they are protected from costly boundary disputes? The solution lies in obtaining more comprehensive coverage that specifically addresses these risks.
The Solution: Enhanced Policies and Endorsements
Homebuyers often have the option to purchase an "enhanced" title insurance policy. These policies provide more extensive coverage than a standard policy for a one-time additional cost. Critically, a key feature of many enhanced policies is the removal of the standard survey exception, thereby providing coverage for certain boundary and encroachment issues.
Even with a standard policy, you can sometimes add specific "endorsements." An endorsement is an add-on to the policy that provides coverage for a specific risk that would otherwise be excluded.
What Enhanced Coverage Typically Includes
An enhanced policy goes beyond standard coverage to protect against a wider array of potential problems. While policies vary, enhanced coverage often includes:
- Survey and Boundary Protection: This is the most important feature for this discussion. It specifically covers financial loss from encroachments and other boundary issues that may have been undiscovered. For example, it could protect you if you are later forced to remove a structure that encroaches onto a neighbor's land.
- Post-Policy Forgery: Provides protection if someone fraudulently attempts to transfer your title after you have already become the owner.
- Building Permit Violations: Covers losses if you are forced to remove or remedy a structure on your property because a previous owner built it without the necessary local government permits.
- Zoning Violations: Offers protection if you discover that a previous owner's modifications to the property violated zoning laws.
The Role of a Survey
To provide this expanded coverage and remove the survey exception, the title insurer will almost always require you to get a new, certified boundary survey before you close on the property. Under Florida law, if a recent survey meeting state standards is provided to the insurer, the policy can only list exceptions for issues actually shown on that survey.
This makes the survey a powerful tool. It must be conducted by a registered Florida surveyor, completed within 90 days of closing, and formally accepted by the insurer. This requirement ensures all parties are working with a clear and accurate understanding of the property's physical boundaries.
A Board Certified Real Estate Attorney's Role in Preventing Disputes
While a title company plays a central role in issuing an insurance policy, a Board Certified Real Estate Attorney works directly for you, advocating solely for your interests throughout the transaction. Their involvement adds a layer of protection that goes far beyond the standard closing process. An attorney’s job is not just to facilitate a transaction but to proactively identify and mitigate risks before they become serious problems.
This is why it is all the more important to get legal assistance immediately when purchasing property.
Proactive Due Diligence
An experienced real estate attorney provides comprehensive due diligence. Our role as a firm with a Board Certified Real Estate Attorney on staff includes several key actions designed to protect you:
- Reviewing the Title Commitment: Before closing, the title company issues a "commitment," which is a promise to insure the title based on certain conditions and exceptions. We meticulously analyze this document to spot unusual exceptions, potential risks, or restrictions that could limit your use of the property.
- Analyzing the Survey: We do more than just confirm a survey was done. We scrutinize the surveyor's findings for any evidence of encroachments, unrecorded easements, boundary irregularities, or potential points of conflict with neighbors. Local attorneys in areas like Vero Beach often provide insight during this review, as they are familiar with regional development patterns and common issues.
- Explaining Policy Exceptions: We translate the dense legal language of the policy into plain English. We ensure you understand what is—and just as importantly, what is not—covered. Based on the property and your plans for it, we can advise on whether pursuing an enhanced policy or specific endorsements is a wise investment.
- Ensuring Compliance: Real estate transactions are governed by a dense network of laws. We ensure every aspect of your closing adheres to Florida law, including the statutes that govern Conveyances of Land and recent changes regarding witness requirements on deeds.
Frequently Asked Questions About Title Insurance and Boundary Disputes
Can I purchase title insurance after I've already bought my house?
Generally, no. Title insurance is designed to protect against past, unknown defects that existed up to the moment you took ownership. It is purchased at the time of closing. It is not possible to buy a policy to cover a problem, like a boundary dispute, that has already been discovered.
What if my neighbor and I have conflicting surveys?
This is a common cause of boundary disputes. It often happens when one survey is much older and was performed using less precise technology. Resolving this conflict typically involves hiring a new, independent surveyor to conduct a modern analysis. If an agreement still cannot be reached, it may require a legal agreement or court action to establish the official boundary line.
Does title insurance cover unpermitted additions or structures?
A standard title insurance policy typically does not cover issues related to building permits. However, an enhanced policy often provides coverage in this area. If a government entity forces you to remove or repair a structure that a previous owner built without proper permits, an enhanced policy may cover your financial loss.
What is an easement, and will my title insurance policy show it?
An easement is a legal right for another party to use a portion of your land for a specific purpose. A common example is a utility company having an easement to access power lines on your property. Any easements that are properly recorded in the public records should be discovered during the title search and will be listed as an exception in your title policy. This means the policy will not cover any disputes related to that known easement. An unrecorded easement, however, might be covered, particularly if you have an enhanced policy.
Secure Your Property Rights with Lulich & Attorneys
The best way to protect your largest investment is by taking proactive steps during the purchasing process and securing knowledgeable legal guidance from the very beginning.
Do not wait for a small disagreement to become a costly legal problem. Contact Lulich & Attorneys today at (772) 589-5500 for a consultation.