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Do I Get Title Insurance on a Condominium?

In a condominium, you technically do not own “land” but rather you own the “air space” inside the walls, ceiling and floor of your unit. Title insurance is available for a condominium, just as it is in a house on it’s own parcel of land. You should get title insurance on your condominium unit to protect your interests.

A title search will be done when you are purchasing your condominium, just as it is when buying a house, and this search will reveal any defects in the title of the unit along with any problems or liens which may occur against the condominium building or the complex itself. You will receive a deed to your own unit plus an undivided interest in the common areas, such as the parking areas, walkways, yards, and pool.

Read over the title report carefully. You would want to be sure that you could not be held liable for any unpaid bills or liens against the condominium association. If there are unpaid bills on the common areas, the association could prepare an affidavit stating that they have the money to pay the bill. If there is litigation regarding an unpaid bill, the association could post a bond or set the money aside for payment of that debt.

Check with your escrow or closing agent for the correct procedure to follow if you find something objectionable on the title report. If a lender is involved in your purchase, they will require title insurance to protect their interest in the condominium unit. Often special condominium “endorsements” are required which will be attached to the title insurance policy.

The condominium documents or “condo docs” or Covenants, Conditions and Restrictions are normally incorporated in the deed and you should read these carefully, as they set forth all the rights, duties, and obligations of all the unit owners. Your preliminary title report will show the book and page where these documents are recorded in the official country records. You can ask your escrow officer, the homeowner’s association or the recorder’s office for a copy.

It is important that you read these documents carefully. Although they are often voluminous and complex to read, they spell out the specific conditions which bind each unit owner.

[div class=”tipbox”]TIP
Included in the condominium documents may be rules which limit the number, type, and weight of pets; how many visitors you can have at any one time; how often – and for how long – you can rent out your unit (if at all); when and how you can reserve the patio, sundeck, party room, or building barbeque grill; when you can have work done in your unit; and, what day you can close and move into your unit.[/div]

Related Question

What are the common title endorsements for a condominium?

The standard ALTA condominium endorsement covers a loss suffered by reason of non-compliance with the requirements of the applicable condominium statutes and other provisions frequently found in the documents. It insures against most violations of any restrictive covenants contained in the condominium documents and provides insurance to a condominium unit first mortgagee against loss of priority of the insured mortgage by reason of charges and assessments provided for in the condominium documents. It insures against any obligation to remove improvements due to encroachments by other units or any of the common elements, failure of title resulting from a right of first refusal, or loss or damage by reason of the unit not being entitled by law to be assessed as a separate tax parcel. Of course, a special condominium endorsement can be negotiated and custom crafted, subject to state regulatory restrictions.

ALTA Endorsement
Form 4 (Condominium)

The Company insures the insured against loss or damage sustained by reason of:

  1. The failure of the unit identified in Schedule A and its common elements to be part of a condominium within the meaning of the condominium statutes of the jurisdiction in which the unit and its common elements are located.
  2. The failure of the documents required by the condominium statutes to comply with the requirements of the statutes to the extent that such failure affects the title to the unit and its common elements.
  3. Present violations of any restrictive covenants which restrict the use of the unit and its common elements and which are contained in the condominium documents, except violations relating to environmental protection unless a notice of a violation thereof has been recorded or filed in the public records and is not excepted in Schedule B.  The restrictive covenants do not contain any provisions which will cause a forfeiture or reversion of title.
  4. The priority of any lien for charges and assessments at Date of Policy provided for in the condominium statutes and condominium documents over the lien of any insured mortgage identified in Schedule A.
  5. The failure of the unit and its common elements to be entitled by law to be assessed for real property taxes as a separate parcel.
  6. any obligation to remove any improvements which exist at Date Of Policy because of any present encroachments or because of any future unintentional encroachment of the common elements upon any unit or of any unit upon the common elements or another unit.
  7. The failure of title by reason of a right of first refusal to purchase the unit and its common elements which was exercised or could have been exercised at Date of Policy.

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