What is title insurance on land, and what does it not cover?

Question

Turnrow Capital · Accepted Answer

Title insurance is a one-time-premium policy that defends and compensates you if a covered defect in ownership surfaces — a forged deed, a missed lien, an heir with a claim. On land, the standard policy notably does NOT cover: anything a survey would reveal, unrecorded easements, water rights, mineral rights, or Schedule B exceptions.

Two policies exist at closing: the owner's policy protecting the buyer for the purchase price, and the lender's policy protecting the mortgage. Premiums are one-time, regulated in many states, and typically run $500–$3,500 on ag parcels depending on price. Coverage lasts as long as you (or your heirs) own the property.

The exclusions are where land buyers get hurt. Standard policies except "matters that would be disclosed by an accurate survey" — boundary overlaps, encroaching fences, a barn over the line. They except unrecorded rights, parties in possession (a tenant farming under a handshake lease), and everything listed in Schedule B. Water and mineral rights are almost never insured.

Two upgrades are worth asking about: an ALTA extended coverage policy, which removes the survey exception when you provide a current ALTA survey, and specific endorsements (access, contiguity, zoning). On larger purchases, the survey-plus-extended-coverage combination is the single best title protection money buys. Ask your title company what endorsements are available in your state.