Written By: Kevin Weaver, Underwriting Counsel

The requirement to produce a survey to remove the general survey exception on a title policy used to be ubiquitous, and while it is still a standard requirement to provide a survey for survey coverage on an owner’s policy, the need for surveys for loan policies has markedly decreased over the past couple of decades.  In most states, Underwriters will allow for the removal of the general survey exception based on an affidavit from the owner/borrower of platted property.  Requirements may vary for metes and bounds property, and in a handful of states the requirements for production of a survey are stricter due to state laws and regulations.  So, while the chances of being involved in survey problems are not as great as they once were, no doubt you have encountered your fair share.  If so, you know the biggest issues revealed by surveys are encroachments, either something crawling or springing leaps and bounds from the subject property onto someone else’s property, or vice versa.

How do title companies deal with encroachments?  Well, it’s more of an art than a science and, like many title issues, it’ s a matter of risk translated into economic terms.  The new addition to the house that sits over the property line?  The title company isn’t writing over that one.  The cost to the owner, or the title company if they do write over it and it becomes a claim, would be significant.  Before tearing down the addition, an attempt would be made by the borrower’s attorney to obtain an easement from the adjoining landowner.  There’s the cost of the attorney and the cost of the surveyor to draft a legal description for the easement.  Then there is how much the borrower may have to pay the adjoining landowner for the easement rights, which may (probably will) depend on the size of the easement.  An expensive proposition no matter how you look at it, and a losing but still expensive proposition if the adjoining landowner is not receptive.  Now let’s look at a rickety wooden fence that is one foot over the property line.  No easement to buy there.  Why would you?  Tear down the old fence and build a new one on the property line.  Or don’t build a new one at all.  The point is, a title company will most likely not show this encroachment on the commitment/policy, or if it does will affirmatively insure over it, because the cost if title eventually needs to pay isn’t the cost of an attorney and surveyor and payment to the adjoining landowner, but maybe the cost of a day laborer or two and a junk removal company.

Those are two easy extremes, but it’s not always that clear, and that brings us to our Title Tale for this issue.  It’s a bit funny in a “why did they do that?” kind of way, and a bit informative as well.  Kind of a middle ground between our last two examples.

We received a survey showing an encroachment of a “stone area” 17 feet over the southerly property line.  Due to the depth of the encroachment, we decided to show it as an exception on the commitment.  The client asked what it would take to remove the exception and, knowing the cost involved in obtaining an easement even if the adjacent landowner agreed to do so, we said “remove the encroachment.”  By that point, however, someone had added an aerial view of the property to the file.  Upon review of that picture, it was clear the stone area was not a structure, and it was in what appeared to be an uninhabited and wild portion of the adjacent landowner’s large parcel.  Due to what we determined was a low risk, we removed the exception from the commitment.  Why have the borrower pay for something that didn’t seem necessary?

Well, the client’s underwriter asked us to put the exception for the encroachment back on the commitment.    That’s right, they didn’t want us to remove the exception, they wanted us to add it back in.  They said they were going to have the borrower obtain an easement for the encroachment.  This is the funny in a “why did they do that?” way moment, because with no exception on the commitment, the borrower isn’t required to expend time and money solving a problem for which the title company would be responsible if it became a claim.  But, hey, we are not going to complain if a client insists on mitigating our risk, so we added the exception back to the commitment and informed the client to contact us once the borrower and his attorney went through the not inexpensive task of procuring and recording an easement.

Three weeks later we received an amended survey showing the encroachment had been removed.  We do not know how much it cost to remove, or if it cost anything, but now after what seems a long and winding road we have a happy client and a happy borrower, and in the end that’s what counts.

What lessons can we take away from this Title Tale?   The first is that if it ain’t broke, don’t fix it. Ask a title company to add an exception to the commitment that the title company has already determined is low risk, and you might run into the law of unintended consequences.  That doesn’t just apply to survey matters, either.  The second lesson is that some survey matters are black, and some are white, but a lot of them are gray.  Work with your title company to make your survey problem loos the lightest shade of gray you can.  If that doesn’t successfully eliminate the exception, don’t panic.  Work with your borrower to come up a resolution that satisfies all parties, like our client in the above example did.

We are constantly updating to reflect any increases or decreases in state fees or underwriter changes to ensure you are pulling accurate quotes each time. Our calculator has been updated to reflect fee changes in the following state(s):

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Conveniently get a quote any time, day or night, by simply and accurately inputting the required information and let our interactive fee calculator do the rest. Please call 844-808-8299 or email Solutions@AllegiantReverse.com for further details or for a quote.

Understanding Some Hidden Challenges of Inheriting Property: Medicaid Estate Recovery

Written By: Mylene Marcelo

Dennis inherited his home in Tennessee from his mother, Alice, who passed away five years ago at the age of 82. Although Dennis had been living in the home, the property was never formally transferred into his name. Alice did not leave a Will, and her estate was never probated. As her only child and sole heir, Dennis assumed the process would be straightforward. Not all inherited property cases are easy, sometimes things could get complicated.

To move forward with a mortgage, Dennis needed proof of ownership. Instead of going through the lengthy probate process, we at ARS would sometimes accept the use of an Affidavit of Heirship (AOH). This legal document is signed by two disinterested parties who would know the decedent and would confirm and provide detail of the heir’s relationship setting forth any facts or containing a statement of any facts pertinent to make certain that the person is legally the entitled heir at the time of the decedent’s death. It is important that the AOH is submitted to ARS along with supporting information for review and approval.

After determining and proving that Dennis was the only heir, another issue has surfaced: Medicaid Estate Recovery or what is referred to as “clawback”. Alice had received long-term care through Medicaid before her passing. Many don’t realize that if a Medicaid recipient owns a home, the state may place a lien on the property they owned after they die. This is known as Medicaid Estate Recovery, and it allows states to recover care costs from the value of the home. In Tennessee, it is called TennCare. There are different terms used in different states, as it is called “MassHealth” in Massachusetts to name another one. Statutes of limitations regarding Medicaid Estate Recovery vary with different states because each state has different rules and all are subject to change, so it is always best to check.

In our case, Dennis contacted the state to check for any claims—and discovered that Alice’s estate owed $82,000 to Medicaid. It is a title insurance requirement to obtain release from the estate before the transaction can be closed.

Dennis’s story is a powerful reminder that inheriting property can come with unexpected legal and financial challenges. If your loved one received Medicaid benefits, it’s essential to investigate potential estate recovery claims early. Seeking professional guidance can help avoid surprises and protect your family’s legacy.