Read on to better understand your options when it comes to Title Insurance vs. Real Property Reports [RPRs]
What is “RPR”?
A Real Property Report [RPR] is a legal document that clearly illustrates the location of all pertinent, visible public and private improvement, relative to property boundaries.
What is Title Insurance?
Title Insurance simply insures the homeowner against any conflicts in the Real property Report. Most insurance policies insure for the future, however Title Insurance covers the past. Here’s an example:
“Two years after you have purchased your home with title insurance… the neighbor is selling his home. He orders an RPR and discovers your deck does not comply! Title insurance may offer coverage of this issue if the deck was there when you purchased the property.”
Why Should I Care?
Most For Sale by Owner [FSBO] real estate transactions require the Seller to provide the Buyer with an RPR and compliance. But only a current RPR can reflect the accurate state/presentation of the property. However, in most cases, the seller will not have an RPR that meets these needs. Usually, the seller receives an RPR when they bought the home- often several years prior.
This may be an excellent reason to buy Title Insurance. If the seller is telling the truth, it should be obvious by looking at the existing RPR. Once the buyer is confident nothing has changed, the lender and the buyer should be comfortable closing with the existing RPR and Title Insurance combined. Keep in mind that “municipal compliance” may still need to be obtained- each scenario is different.
Another scenario in which Title Insurance may be helpful is when the new RPR is delayed. Perhaps the seller has agreed to supply a new RPR, but the Survey Company cannot have the document completed before the time of closing. In this case, assuming all parties (including your lawyer) are in agreement, Title Insurance may be used to bridge the gap. In this case, Title Insurance will appease the Mortgage Lender, allowing the sale to close on time, with the RPR to be delivered to the buyer after the sale.
Although Title Insurance is a complete legal option and able to stand alone, most For Sale by Owners stick to requesting the most reliable source available… The Real Property Report.