Title Insurance Policy Covers Liability Scope

Question: We purchased a five-acre lot last summer in the New River area. We had title insurance. We recently decided to build a home on this lot. Our construction lender required a survey. This survey showed that our lot is not five acres, but only four acres, because the legal description in the special warranty deed from our seller includes an acre of land not owned by our seller. Do we have a claim for damages against our title company for the loss of one acre?

  Answer: Probably not. You should, however, have an attorney review your title insurance policy and other closing documents to determine if there could be title insurance coverage. If there is title insurance coverage, title companies usually correct this loss of acreage problem either by purchasing the additional land for the buyer, or by paying damages to the buyer for the loss of the additional land. The title company then would probably seek reimbursement from the seller based on the seller’s warranty in the special or general warranty deed that the seller owned all five acres of the land in the legal description.

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