Provided by Matthew A. Quick, Esq., an attorney licensed in the state of Illinois.
Title insurance coverage is dictated by the terms of the policy issued by the title insurance company. In most, if not all, policies for title insurance there is a provision for “Continuation of Coverage” or “Continuation of Insurance.” Typically, this provision provides that the insurance will continue only so long as the insured holds an interest in the land or has liability by reason of warranties given in any transfer of the title.
It is common for real estate to be conveyed with quit claim deeds and/or no title insurance. Perhaps the informality is due to estate planning or the relationship between the grantor and grantee, nonetheless the conveyance is without warranties, thus, could discontinue title insurance coverage.
To address this issue there usually exists a policy modification endorsement that can be purchased from the title insurance company when any deed modifies the current vesting. However, this endorsement does not cover a quit claim deed to a completely unrelated third-party. It will typically cover a spouse that is added or removed from title, or if property is moved into trust.
In addition, consider using warranty deeds to effectuate property transfers rather than quit claim deeds. If a warranty deed is the proper conveyancing method, it may be useful in continuing the insurance coverage. That is to say, if a title problem arises, the grantees may be able to look back to the grantor for title coverage.
The lesson: Before transferring real estate, talk with an attorney to avoid unintended consequences.
Matthew A. Quick, Esq.
13319 West Heiden Circle
Lake Bluff, Illinois 60044