Title policy exception
A specific risk the title insurer refuses to cover.
Exceptions can be standard (matters a survey would reveal, rights of parties in possession) or specific (a named utility easement recorded at a stated book and page).
Some standard exceptions can be removed by delivering a current survey or an owner's affidavit.
Why it matters when you buy
Every exception is a risk that shifts from the insurer back to you.
How it reads in a real document
“Exception 5: Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the title that would be disclosed by an accurate and complete land survey.”
This is a standard exception. Everything a survey would have revealed is carved out of coverage — which is the insurer telling you, in advance, to get a survey.
The mistake people make
Declining the survey to save money, then discovering the fence is over the line with no coverage to fall back on.
What to do next
- Ask which standard exceptions can be deleted by delivering a current survey or an owner's affidavit.
- Price extended coverage against the cost of the survey — often they are close.
- Keep the final policy with the survey; a future buyer will ask for both.
What it does to value
An exception marks the boundary of your coverage. If a listed easement later destroys the value of your building plan, the insurer's answer is that the matter was excepted, and the loss is yours. Reading the exceptions is the only way to know what risk you are actually keeping.
What is not true
It is not true that an exception means the title company thinks the item is harmless. It means the company will not pay if it turns out not to be.
Questions people ask
Are all exceptions equally serious?
No. Standard printed exceptions -- rights of parties in possession, unrecorded mechanics' liens, matters a survey would show -- appear on nearly every commitment and can often be removed. Specific exceptions naming a recorded book and page are the ones to read closely.
Can I buy coverage over an exception?
Sometimes, through an endorsement, and it is worth asking. Insurers will occasionally insure against forced removal of an existing improvement that sits in an easement, for example, once they have a survey showing exactly what is where.
What if the exception references a document that no longer exists?
Ask the title company to clear it. Exceptions referencing released, expired, or superseded instruments get carried forward from prior policies more often than people expect, and a documented release is usually enough to have it dropped.
Related terms
Where this comes up
Homeowner questions where “title policy exception” decides the answer:
- How do I read a title commitment for easements?
- What happens if I build on an easement?
- Can an easement expire?
- Does an easement affect my mortgage or title insurance?
- How do I vacate a utility easement?
Time limits differ by state - see the prescriptive easement period where your property is.
Wondering what an encumbrance like this is worth? Estimate the effect on property value.
General educational reference only. Prescription periods and their exceptions change, and several states set the period by case law rather than by statute. Read the linked official code and consult a licensed attorney in that state before relying on any of it.
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