Here's a home buying riddle for you: when is deleting really adding?
The answer: when you delete the survey exception on a Texas Title insurance policy.
What?!?!? Don't worry. You're not the only one who is confused. As with so much of the specific language in in the updated versions of Texas Real Estate Commission (TREC) Contracts, it can be hard to understand the implications of industry jargon if you are unfamiliar. Let's start by defining a few key terms:
Here's the what's what according to Independence Title:
A representation of the property prepared by a licensed provider depicting measurements of area, boundary lines, structures, fences, easements and other permanent features of a property, both visible on the ground and as recorded in documents in the public record.
Also known as Area and Boundaries Exception
The language on Schedule B of a title commitment and title policy that says the title insurer is not liable for discrepancies in boundary lines, other people's structures built over property lines and other similar issues that would be shown on a survey of the property.
Also known as Amendment to Area and Boundaries Exception
With a satisfactory survey reviewed and approved by the title company, the buyer may choose to remove the Survey Exception, which adds some coverage back into the Owner's Title Policy.
When a buyer chooses to delete the survey exception, they get back the coverage that was withheld by the item on the title policy. Make sense?
While deleting the survey exception was previously an option for buyers in Texas, the revised TREC promulgated one-to-four family residential contract (effective June 1, 2014) now means an active decision must be made about the survey exception. Here's what the language in the amended contract says:
The standard printed exception as to discrepancies, conflicts, shortages in area or boundary lines, encroachments or protrusions, or overlapping improvements:
 will not be amended or deleted from the title policy;
 will be amended to read, "shortages in area"
at the expense of
How does this protect a buyer?
Opting to delete the survey exception can benefit a buyer with additional protection. For example, deleting the survey exemption could protect a homeowner when:
- a utility company requires removal of improvements that are located in an easement
- buyers used a pre-existing survey prepared for a previous owner. (In many cases, the surveyor is only liable to the homeowners who purchased the survey.)
- the homeowners' association claims improvements are built over a building line and demand the improvements be removed
- a neighbor claims insured improvements are over the property line into their property
What's it Cost?
Typically the price for deleting the survey exemption is only 5% of the basic title premium. For example, for a $400,000 home, it would cost about $125 for this increased coverage.
Not sure what your Title Policy will cost? Use this calculator to get an estimate.
Want to know more about Texas Real Estate contracts and what they mean to you? Just ask your question below and I'll get back to you with a response ASAP.