Quick Answer
Standard exceptions are general categories of matters that are excluded from title insurance coverage unless removed, modified, or specifically covered by an endorsement. They are typically printed on the policy form and apply unless the title company has evidence to remove them.
When you read a title commitment, you will see certain exceptions that appear on almost every policy. These are standard exceptions, and understanding them helps you know what your policy does and does not cover by default.
What Can Standard Exceptions Involve
Standard exceptions vary by insurer and jurisdiction, but they commonly include:
- Rights of parties in possession: The policy may not cover claims by tenants or other occupants whose rights are not shown by public records
- Encroachments and boundary issues: Matters that a survey would reveal but the title search alone would not
- Unrecorded easements: Easements that are not recorded but may be visible or known
- Mechanics liens: Liens by contractors or suppliers that are not yet filed but could be filed later
- Taxes and assessments: Certain tax matters that are not yet a lien
Why Are These Exceptions Included
Standard exceptions exist because the title insurer cannot discover certain types of matters through a records search alone. A survey would reveal encroachments, but the title company does not usually perform a physical survey. A records search would not reveal an unrecorded tenant lease. Standard exceptions protect the insurer from risks that cannot be discovered through public records research.
Can Standard Exceptions Be Removed
In some cases, yes. If the title company receives acceptable evidence addressing the concern, a standard exception may be removed, modified, or covered by an endorsement. For example, a survey showing no encroachments may allow removal of the survey exception. Or an affidavit from the seller may address the parties-in-possession exception. For more, read Can Title Exceptions Be Removed?
Why Buyers Should Care
Standard exceptions can affect your coverage in meaningful ways. If the survey exception remains and a neighbor's fence is actually on your property, the policy may not cover the loss. Buyers who want broader coverage may choose to provide evidence (such as a survey) to remove standard exceptions before closing.
For a broader discussion of exceptions, read What Are Title Exceptions?
Key Takeaway
Standard exceptions are printed exclusions that cover matters a records search alone cannot reveal. They can sometimes be removed with acceptable evidence. Ask your title company which standard exceptions apply and whether they can be addressed.
FAQs
Are standard exceptions the same across all title companies?
Standard exceptions are similar across companies using the same policy forms, but there can be variations. Some insurers have expanded coverage forms that eliminate certain standard exceptions. Always review your specific commitment.
Does an owner's policy have different standard exceptions than a lender's policy?
The standard exceptions are generally similar between owner's and lender's policies, though there may be differences. Review both commitments if you are purchasing both policies.