By Leonard Baron
Why Didn't Agent Tell Me About Easement on Title?
Q. Hi Leonard - I'm buying a single family home and luckily my daughter-in-law, a real estate attorney, noticed an easement on title that gives my neighbor the right to use a small portion of the lot of the property that I "was" considering buying! I can't believe my real estate agent didn't review this and point it out nor did the seller disclose this! Kara N., Saint Cloud, MN
A. Hi Kara - Reviewing the title insurance, abstract and schedule of exclusions is the job of the buyer -- that's you -- and not your real estate agent. A real estate agent is not a title expert nor a lawyer, and if the buyer has questions after reviewing these documents, they need to work with the title insurance company to better understand the issues. Also, the seller did disclose this to you, in writing, via the title insurance policy that was purchased for you; that's why you are aware of the issue in the first place.
Be thankful for the daughter-in-law, because only maybe one percent of residential buyers review these vitally important documents related to title to see if there are any issues - like an easement in favor of the neighbor. Most learn the hard way after they close escrow when some major problem arises.
Now, to help you settle this issue or terminate the contract, you should contact the neighbor and see if they are willing to release the easement. They probably will want some compensation, and you can ask other parties to the contract - seller, real estate agents, etc., - if they will share that burden to satisfy this issue. Make sure you work with an attorney to get this properly resolved. If the neighbor won't release it, or wants excessive compensation, you will need to decide if you want to complete or terminate the contract.
All buyers should sit down with the title insurance agent and have that person walk them through all the items on the title abstract, the title insurance policy schedule of exclusions, plot any easements on the county plat of the property, and walk the property with the plat to determine if there are any physical encumbrances that could present a problem. Hopefully you'll be able to work out the details on your deal.
Insurance Coverage - Sewer Backup
Q. Hi Professor, I'm really writing this so that you alert others so they hopefully can avoid this costly uninsured damage from occurring to them. My sewer line backed up and, unfortunately, flooded my basement. The cleanup and repairs were about $3,500 and I've now learned that my homeowners insurance did not cover this damage. Please alert others that they should consider paying for a "sewer backup rider" to their insurance policy. Tim B., Portland, OR
A. Hey Tim, sorry to hear about your loss. But you are right, people need to be alerted to this issue. Most insurance policies do not cover sewer backup unless you have a specific insurance "rider" for this coverage. And some insurance companies do not provide this coverage regardless - so it's a risk you may have to assume as a result of being a property owner.
Some other fixes - People can also have a backwater valve installed that should stop sewer backups, but it probably will cost between $500 - $1,500 depending on the property and sewer lateral. And if one lives in a neighborhood where the sewer lines are older, or neighbors have sewer clog issues, they might want to have their sewer line scoped by a plumber camera to see if there are cracks, clogs, or tree roots in the line. The cost is $250-$500. If the line is clogged, at least they can work to fix the issue before a sewer backup causes a major disaster. Also, of course, don't throw food, cooking oil, paper goods, etc. down the drain as those will clog it over time!
Lastly, if the backup is on your property, it's definitely your problem. If it is in the city system, the city might be responsible, but this varies by jurisdiction. If it's in an HOA, the HOA insurance might cover this peril, but you'll have to check with them. It's probably best to do this sooner rather than later, so you know if there is coverage.
Regardless, sorry to hear about your issue, and thanks for alerting the readers to this important, and generally uninsured peril.
Leonard Baron, MBA, is America's Real Estate Professor® - his unbiased, neutral and inexpensive "Real Estate Ownership, Investment and Due Diligence 101" textbook teaches real estate owners how to make smart and safe purchase decisions. He is a San Diego State University Lecturer, blogs at Zillow.com, and loves kicking the tires of a good piece of dirt! More at ProfessorBaron.com. Email Your Questions to: Leonard@ProfessorBaron.com