"Title Insurance"

(Continued on page 16)

The Michigan Riparian Winter 2017

A formal nal title insurance policy is usually issued (and

sent) to the buyer a few months aer the closing. e buyer

should take great care to preserve the original of the title

insurance policy forever. Furthermore, it is oen prudent

to make copies of the actual original title insurance policy

and to store the copies at a dierent location than the actual

original document for safe keeping (that is also true with

the deed or land contract aer closing and recording). Title

insurance insures good title, lack of encumbrances, etc.,

apart from those items which are expressly “carved out”

or exempted in the title insurance commitment and title

insurance policy. Normally, the title insurance will pay for

attorney fees and costs for an attorney provided by the title

insurance company to the buyer to defend the buyer’s title if

challenged as well as any damages that might be incurred by

the buyer resulting from a title defect or other matter covered

by the title insurance policy.

It has also become very common for real estate closings

in Michigan to occur at the oces of the title insurance

company (or its agent or aliate) and for the title insurance

company to provide many of the closing documents (the

deed or land contract, any mortgage, a closing statement,

etc.) for additional fees.

Why is it so important for title insurance to be provided

for riparian properties? ere are multiple reasons. First,

title insurance veries that the prospective purchaser will

have good and marketable title for the waterfront property

Attorney Writes

"Title Insurance"

In Michigan, it is foolish to purchase riparian or waterfront

property without having a title insurance commitment done

by a title insurance company for the prospective purchaser

to review before closing and for the purchaser to have title

insurance on the property once the closing occurs.

In the “old days,” there was no title insurance for purchasers

of real property in Michigan. Rather, real estate buyers (or

their attorneys) reviewed abstracts or attorney opinions

regarding title. An abstract was generally just a listing of all

prior recorded documents regarding the property involved

going back a certain number of years. Abstracts told lay

people very little. A lawyer’s opinion dealt with whether

or not the seller had proper title and any limitations upon

that title. Neither the old abstracts or attorney title opinions

were insurance as such, nor did they really constitute reliable

guarantees of proper title to the purchaser.

Insurance companies eventually introduced a product

oen referred to as “title insurance.” Title insurance is

very important for almost all real property purchases, but

particularly so where a waterfront property is involved. e

issuance of title insurance is a two-step process. Almost all

real estate purchase/sales agreements require the seller to

provide to the buyer a “title insurance commitment” before

closing and a title insurance policy aer closing. Typically,

both are issued in an amount equal to the purchase price.

A title insurance commitment is usually issued by a title

insurance company before closing and allows the prospective

purchaser (and potentially, his or her attorney) to see whether

the seller has good title, whether there are any encumbrances

on the property, what the property taxes are annually, any

requirements for closing, and similar matters. Before issuing

a title insurance commitment, the title company does a title

search of the property, looking for relevant documents

recorded with the local county register of deeds regarding

the property. Once a title insurance commitment is issued,

the title company is arming that it will issue a nal title

insurance policy in favor of the buyer aer closing with all

of the requirements, exceptions and limitations contained in

the title insurance commitment. Typically, the seller pays

for both the title insurance commitment and the eventual

title insurance (although there is generally one overall fee

for both), unless the purchase/sales agreement provides

otherwise.

By Cliord H. Bloom, Esq.

Bloom Sluggett Morgan, PC

Grand Rapids, Michigan

www.bsmlawpc.com

TITLE INSURANCE IS VERY IMPORTANT

FOR ALMOST ALL REAL PROPERTY

PURCHASES, BUT PARTICULARLY SO

WHERE A WATERFRONT PROPERTY IS

INVOLVED.

Over 30 Years of

Invasive Plant

Management

Now with three locations to better serve you!

800

382

4434 • www.plmcorp.net



Lake Management

Planning



Vegetation Surveys



Bathymetric

Mapping



Herbicide

Applications



Natural Shoreline

Restoration



Water Quality

Monitoring



Weed Harvesting



Terrestrial Plant

Management



Fish Evaluations



Fountain &

Aeration Systems



Retail Sales

The Michigan Riparian Winter 2017

involved. Second, it is not uncommon for waterfront

properties to have encumbrances such as deed restrictions or

an easement, which a prospective purchaser of a waterfront

property should know before closing. ird, if the waterfront

property is not located on a public road, it is always best to

have the title insurance cover and insure any private road

or access easement for the property. Fourth, title insurance

insures the legal description involved and quite oen legal

descriptions are proof that a property is waterfront. Finally,

title insurance helps give the prospective purchaser “peace

of mind”.

Unfortunately, title insurance policies almost never

warrant or guarantee riparian rights or the riparian nature

of the parcel involved. On occasion, a special rider on an

insurance policy can be purchased to cover riparian issues,

but those riders tend to be fairly rare and can be quite

expensive.

In Michigan, one should almost never buy waterfront

property without obtaining a title commitment prior to

closing and title insurance for the property that becomes

eective at and aer closing.

"Title Insurance"

(Continued from page 13)