Wills, Trusts & Estates Prof Blog

Editor: Gerry W. Beyer
Texas Tech Univ. School of Law

Monday, April 1, 2019

Am I Still Covered Under the Title Insurance Policy?

TitleAn important issue to keep in mind  when transferring property for estate planning purposes is whether the successor owner will be covered by the grantee’s title insurance policy. Title insurance policies insure only the title of the “Insured” identified in the policy, and older ALTA policies created confusion by being vague about whether certain subsequent owners were insured.

By expanding the definition of the "insured," the ALTA 2006 policy form eliminates much of the doubt regarding continuing coverage under a title insurance policy. This new clarification includes:

(A) successors to the title of the Insured by operation of law as distinguished from purchase, including heirs, devisees, survivors, personal representatives, or next of kin;
(B) successors to an Insured by dissolution, merger, consolidation, distribution, or reorganization;
(C) successors to an Insured by its conversion to another kind of entity; and
(D) a grantee of an Insured under a deed delivered without payment of actual valuable consideration conveying the title
(1) if the stock, shares, memberships, or other equity interests of the grantee are wholly-owned by the named Insured,
(2) if the grantee wholly owns the named Insured,
(3) if the grantee is wholly-owned by an affiliated entity of the named Insured, provided the affiliated entity and the named Insured are both wholly-owned by the same person or entity, or
(4) if the grantee is a trustee or beneficiary of a trust created by a written instrument established by the Insured named in Schedule A for estate planning purposes.

This definition does not expand those future owners that are covered by the title insurance policy, but instead clarifies which subsequent owners are deemed to take title to the subject property by operation of law.

See Ian Douglas, Am I Still Covered Under the Title Insurance Policy?, Swlaw.com, March 14, 2019.

Special thanks to Jim Hillhouse (Professional Legal Marketing (PLM, Inc.) for bringing this article to my attention.


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