An endorsement is something that changes the terms of the coverage in the title policy to the buyer or lender’s benefit. It is an attachment to the policy that generally offers more coverage from what is included in the basic policy.
One of the endorsements that adds extra and important coverage for the buyer is the T19.1 endorsement.
What does the T19.1 do and what should an agent tell their client about the coverage?
First, agents should be careful about going into too much detail in describing title policy coverage so as to avoid making legal representations. That said, it is good to have a general explanation and then you can refer them to your trusted escrow officer at TNT.
A good way to remember what the T19.1 covers is the acronym “M.E.R”:
M - Minerals | E - Encroachments | R - Restrictions
Insurance Provisions for Minerals
In general the minerals portion of the T19.1 includes provisions for damage to the improvements on the property that is caused from a future exercise of a right to use the surface of the property for extraction or development of minerals.
Insurance Provisions for Encroachments
The Encroachment section includes provisions for certain encroachment issues on a property. Common examples are:
- Removal of an improvement because it violates a setback line shown on the plat or in the real property records;
- Encroachment of the improvements into an easement; or
- Encroachment of the improvements into neighboring land.
Insurance Provisions for Restrictions
This coverage generally provides coverage for enforcement of the existing restrictions. Some examples are:
- Current violation of the restrictions that existed
- at closing but was not disclosed by the HOA;
- First rights of refusal;
- Unpaid assessments;
Without purchasing this additional coverage the buyer would have no protection under their policy for the examples discussed above.
Requirements for Issuance
In order to issue the T19.1 Texas National Title must be presented with the survey and a current T-47 (if we are using an existing survey). If that survey shows existing encroachments then the coverage in the T19.1 may need to be modified.
Cost of Issuance
This endorsement can be issued on residential or non-residential property and is a pretty nominal cost. For residential property the cost is 5% if purchased with Survey Deletion a/k/a Area and Boundary Coverage (as discussed in previous Closer’s Corners). If purchased on its own it is 10%. For non-residential properties the charge is 10% and 15% respectively.
This Closer’s Corner is intended to be a general overview of the T19.1 Endorsement that is available to be attached to an Owner’s Title Policy. To review the endorsement in full a copy can be located here:
Our closing teams are very knowledgeable about title policies and endorsements. While we cannot provide legal advice for a specific transaction we can always talk about our insurance products and help our clients get a general understanding of the coverage that can be obtained by a buyer. A prudent real estate agent wants to be able to inform the client of their options and then direct them to Texas National Title for more in-depth information.