Exception (Title Policy)
Definition:
An exception in a title policy is a provision that excludes certain risks or defects from coverage under a title insurance policy. It identifies specific matters—such as easements, liens, encroachments, or other encumbrances—that are not protected by the insurer, meaning the policy will not provide compensation if a claim arises related to these excluded items.
Exception (Title Policy) Information
Exceptions are standard components of title insurance policies and serve to clarify the scope of coverage. They protect the insurer from liability for known issues or risks that could affect the property’s title but are disclosed or recorded in public records. Common examples include utility easements, restrictive covenants, unrecorded rights of parties in possession, and zoning restrictions. Buyers, lenders, and attorneys review these exceptions carefully to understand which risks remain uncovered and to determine if additional coverage or endorsements are necessary.
Florida Legal Definition
Under Florida law, exceptions in title insurance policies are recognized and governed by Florida Statutes Chapter 627, which regulates insurance contracts. Exceptions must be clearly disclosed and incorporated into the policy to be enforceable. Florida courts enforce exceptions as written, and the insurer is not liable for any claims arising from matters explicitly excluded. Policyholders may purchase endorsements or additional coverage to address specific risks not included in the base policy, subject to the insurer’s underwriting rules.
How It’s Used in Practice
Real estate attorneys, title agents, and lenders examine title policies and exceptions during property transactions to assess risk and advise clients. When exceptions are identified, parties may negotiate remedies, such as clearing liens, obtaining additional endorsements, or accepting the risks knowingly. Understanding exceptions is crucial to avoid surprises after closing, ensure proper insurance coverage, and protect both buyers and lenders from potential financial loss related to title defects.
Key Takeaways
- An exception in a title policy excludes certain risks, defects, or encumbrances from coverage.
- Common exceptions include easements, liens, restrictive covenants, unrecorded claims, and zoning restrictions.
- Florida law requires clear disclosure of exceptions, and insurers are not liable for excluded matters.
- Policyholders may purchase endorsements or additional coverage to address risks not covered by exceptions.
- Reviewing exceptions is essential for buyers, lenders, and attorneys to understand potential title risks before closing.
Disclaimer: The information and opinions provided are for general educational, informational or entertainment purposes only and should not be construed as legal advice or a substitute for consultation with a qualified attorney. Any information that you read does not create an attorney–client relationship with Barnes Walker, Goethe, Perron, Shea & Johnson, PLLC, or any of its attorneys. Because laws, regulations, and court interpretations may change over time, the definitions and explanations provided here may not reflect the most current legal standards. The application of law varies depending on your particular facts and jurisdiction. For advice regarding your specific situation, please contact one of our Florida attorneys for personalized guidance.
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