Section 8.1.3 of the Colorado Real Estate Commission approved Purchase and Sale Agreement allows the parties to choose whether the buyer’s title insurance policy will include Owners Extended Coverage (“OEC”).
Owners Extended Coverage is a way to maximize title insurance protection beyond the basic coverage. With every title insurance policy, there are certain exceptions to coverage. Several of these exceptions are referred to as “standard exceptions.” They include:
- Any facts, rights, interests, or claims thereof, not shown by the public records but that could be ascertained by an inspection of the land or that may be asserted by persons in possession of the land.
- Easements, liens or encumbrances, or claims thereof, not shown by the public records.
- Any encroachment, encumbrance, violation, variation, or adverse circumstance affecting the title that would be disclosed by an accurate and complete land survey of the land and not shown by the public records.
- Any lien, or right to a lien, for services, labor or material heretofore or hereafter furnished, imposed by law and not shown by the public records.
Without OEC, the title policy will contain the above exceptions. What that means is the title insurance policy will not cover claims related to those matters. When a buyer is provided with OEC coverage, the above standard exceptions are deleted from the title policy, effectively providing the buyer with greater coverage.