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Survey Deletion Coverage

In the TREC 1-4 Family Residential Contract, Section 6.A.8 refers to whether or not the standard printed exception in a title policy will be amended to include “shortages of area,” known as survey deletion coverage. The Texas Department of Insurance also refers to this as area & boundary coverage, for reference. Schedule B of a title policy identifies the exceptions to coverage as a whole. The majority of the exceptions are known as “standard exceptions,” meaning they use promulgated language from the Texas Department of Insurance. The difference between the standard exception and the amended exception is the basis for understanding survey deletion coverage.

 

Section 6.A.8, in specific, has two options. Section 6.A.8.i gives the party who would be responsible for survey coverage the ability to select the aforementioned standard printed exception as to discrepancies, conflicts, shortages in area or boundary lines, encroachments or protrusions, or overlapping improvements. (As an aside, the obvious question would be why is the phrase “shortages of area” found in the promulgated language, and the amended language? The answer is in their application. Shortages of area in the standard printed exception is meant to prevent title companies from insuring exact acreage so there is no potential for loss based on a discrepancy over tiny measurements of acreage.) This option simply means the financial burden of litigation would fall on the owner of the subject property if loss occurred based on one of these exceptions. If the owner of an adjacent subject property were to undergo improvements that encroach on a boundary line, or if improvements on a subject property cross easement or building lines, or if there is a survey error, the cost of resolution would be entirely on the owner.

 

Conversely, Section 6.A.8. ii gives the party who would be responsible for survey coverage the ability to amend the standard printed exception to read “shortages in area.” The amended exception now protects the owner of the subject property from any discrepancies in boundary or easement lines, as well as surveyor error. In order to obtain this coverage, one must either submit to the title company an existing survey accompanied by a T-47 Residential Real Property Affidavit or obtain a new survey. In both scenarios the survey must meet certain standards before being accepted by the title company. The accepted survey allows for the amending of the exception to read “shortages of area.” There may also need to be additional exceptions taken based on the survey. The Texas Department of Insurance established a rate of 5% of the owner’s policy for residential survey deletion coverage, and 15% of the owner’s policy for non-residential coverage.

 

The ability to understand individual aspects of the real estate contract is imperative in this changing market. In the coming months, Members Title will break down different sections of the TREC 1-4 Family Residential Contract to provide as much insight as possible.

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