Title insurance protects you against defects in the history of ownership: forged deeds, undisclosed heirs, recording errors, and hidden liens that existed before you closed. It does not protect against what happens after closing, and it does not cover L&I violations, open permits, zoning violations, or environmental hazards. Philadelphia buyers who rely on title insurance alone as their due diligence are taking on risks the policy was never designed to cover.
Every Philadelphia real estate transaction involves two separate title insurance policies. Understanding the difference matters because one protects you and one protects your lender.
If you're using a mortgage, your lender will require a loan policy. This policy protects the lender's security interest in the property, not you personally. The coverage amount equals the loan balance and declines as you pay down the mortgage. If there is a title defect that results in a successful claim, the lender gets paid, not you. You still lose the equity you put in.
The owner's policy protects you, the buyer, against covered title defects. Coverage equals the purchase price and typically lasts as long as you or your heirs hold an interest in the property. In Pennsylvania, and in Philadelphia specifically, the seller often pays for the owner's policy as part of the negotiated closing costs, but this is negotiable and varies by transaction. For a $350,000 home, the one-time owner's title premium in Pennsylvania typically runs $1,200 to $1,800 depending on the underwriter.
Philadelphia custom: In many Philly transactions, the seller pays for the owner's title policy and the buyer pays for the lender's policy. This is not a legal requirement. It is a negotiated convention that varies by neighborhood, price point, and market conditions. Confirm who pays for what in your Agreement of Sale before assuming.
Pennsylvania uses a filed rate system where premiums are regulated and set by the PA Insurance Department, so rates are standard across underwriters for a given coverage amount. What varies is the title company's service fee (also called a settlement fee or closing fee), which is separate from the insurance premium itself.
| Purchase Price | Owner's Policy Premium (approx.) | Lender's Policy Premium (approx.) | Settlement/Closing Fee |
|---|---|---|---|
| $150,000 | $700–$900 | $550–$700 | $300–$600 |
| $250,000 | $1,000–$1,300 | $750–$950 | $300–$600 |
| $350,000 | $1,200–$1,600 | $900–$1,200 | $300–$600 |
| $500,000 | $1,600–$2,100 | $1,100–$1,500 | $300–$600 |
| $750,000 | $2,100–$2,900 | $1,500–$2,100 | $400–$700 |
When a lender's and owner's policy are issued simultaneously (which is the norm), you typically get a discounted simultaneous issue rate on the lender's policy, reducing it by 30 to 50 percent compared to what it would cost if purchased alone. Ask your title company for the simultaneous issue rate when comparing quotes.
Before closing, the title company issues a title commitment: a formal written promise to issue the policy, subject to conditions. Read it carefully. The commitment is organized into three parts.
Schedule A identifies the basics of the transaction: the policy amount, the proposed insured (you), how you will take title (vesting), the legal description of the property, and, if applicable, the loan amount and lender. Review the legal description against the deed and the survey if one exists. Errors in Schedule A should be corrected before closing.
Schedule B-I lists the conditions that must be satisfied before the title company will issue the policy. Typically this means: the seller must pay off existing mortgages, discharge any recorded liens or judgments, and satisfy any outstanding tax balances. If a delinquent water account created a PWD lien, it will appear here as a payoff requirement. Your title company tracks completion of these items through the settlement process.
Schedule B-II is the section buyers most often ignore. It lists what the policy will not cover, permanently. There are two categories.
Standard exceptions appear in nearly every Philadelphia title commitment. They include: real estate taxes and assessments for the current year and subsequent years, rights of parties in possession (tenants with unrecorded leases), any facts an accurate survey would reveal, and mechanics liens for work completed but not yet filed of record. These are boilerplate, but the mechanics lien standard exception is particularly relevant for properties that were recently renovated.
Property-specific exceptions are based on what the title search found. Common ones in Philadelphia include: utility easements across the rear of the lot (common in rowhouse blocks for sewer access), party wall agreements, building line restrictions of record, deed covenants from prior subdivisions or urban renewal conveyances, and recorded rights of way. Review each property-specific exception with your real estate attorney. Some are benign; some restrict how you can use or improve the property.
What to do with Schedule B exceptions: Some can be removed. A survey exception can often be eliminated if you commission an ALTA survey and the results are incorporated into the policy. Other exceptions are permanent encumbrances on the property that cannot be removed and will run with the deed. Understanding what you are taking "subject to" before closing is your responsibility, not the title company's.
Title exceptions are the gaps in your coverage. Knowing which ones are routine and which ones require action can save you from inheriting a problem.
Utility easements, drainage easements, and access easements recorded against a property survive the sale. They are typically listed as property-specific exceptions in Schedule B-II. Before accepting an easement exception, understand where the easement is located on the lot and what it restricts. A sewer easement running through the middle of a backyard limits what you can build there. An access easement may give a neighbor the right to cross your property.
Many Philadelphia properties carry old deed covenants from subdivision plats, urban renewal programs, or prior recorded declarations. These can restrict use (residential only), density (single-family only), or improvements (no fence within 10 feet of the front lot line). Recorded restrictions that appear as title exceptions are enforceable by neighboring property owners or homeowners associations, even if the original grantor is long gone.
A lis pendens ("suit pending") is a recorded notice that the property is subject to pending litigation. If one appears in the title search, the title company will list it as an exception or require the seller to resolve the underlying lawsuit before closing. Buying a property with an unresolved lis pendens means you may take ownership subject to the outcome of someone else's legal dispute.
Properties within Philadelphia Historical Commission historic districts carry recorded designations that restrict exterior alterations. If a property is in a historic district, that designation may appear as an exception in the title commitment. See our historic district permits guide for what this means for renovations and additions.
L&I violations, open permits, tax liens, 311 complaints, flood zone, lead service line status. None of these show up in a title search. Flagstone pulls them directly from Philadelphia's open data sources.
Run a free property report →Title insurance covers defects that existed before the policy date and were not disclosed or discoverable at closing. Common covered claims include:
When a covered claim is made, the title insurer defends the claim at its expense and, if unsuccessful, pays you up to the policy limit. For a legitimate chain-of-title defect, this is valuable protection. But the vast majority of Philadelphia due diligence concerns are not chain-of-title defects.
This is the section that matters most for Philly buyers. Title insurance has significant exclusions that are particularly relevant in a city with Philadelphia's compliance landscape.
Active L&I violations are not title defects. They are regulatory compliance issues that run with the property regardless of who owns it. A new owner assumes responsibility for all outstanding violations at the moment of settlement, even if they were issued against a prior owner. Title insurance does not cover this exposure. Neither the title search nor the title commitment will reveal active violations, because they are not recorded at the Recorder of Deeds. You must check the L&I system directly through Philadelphia's Atlas portal or a service like Flagstone before making an offer.
Open permits -- permits that were pulled for work but never received a final L&I inspection -- are also not title defects. When you buy a property with open permits, you inherit the obligation to complete the work or close the permits. Title insurance does not cover the cost of obtaining final inspections, bringing unpermitted work up to code, or resolving stop-work orders. See our open permits guide for full details.
If a property is being used in a way that violates its zoning classification -- an illegal accessory dwelling unit, a commercial use in a residential district, a rental unit operated without a rental license -- title insurance does not address this. Zoning compliance is the buyer's responsibility to verify independently before closing.
Lead paint, asbestos, underground storage tanks, and soil contamination are excluded from standard title insurance. This is relevant throughout Philadelphia, where much of the housing stock predates federal lead paint regulations and where former industrial uses have left contamination in some neighborhoods.
A standard owner's title policy excludes matters that would be revealed by an accurate survey. If a neighbor's fence encroaches on your lot, or if there are easements not visible in the deed, these are generally not covered unless you upgrade to an ALTA extended coverage policy with a survey endorsement. In Philadelphia's tight rowhouse and twin market, this matters more than buyers often realize.
Title insurance covers title defects that existed before the policy was issued. Anything that happens after you close is your responsibility. An active L&I violation issued the week after you close is not a covered loss.
Philadelphia Water Department liens are super-priority liens that take precedence over mortgages and most other encumbrances. A delinquent water account can result in a lien against the property that, if undiscovered, would survive the sale. A careful title search should catch these at the Bureau of Revision of Taxes and Philadelphia Municipal Court, but if one is missed, it falls within standard title insurance coverage as an unknown lien. See our water and sewer lateral guide for the full picture on PWD lien super-priority.
If a prior owner had a judgment entered against them in Pennsylvania, that judgment can attach to real property and follow the deed through transfers unless properly discharged. Title searches cover judgment indices at the Court of Common Pleas. If a judgment lien is missed and surfaces post-closing, this is a covered claim.
Pennsylvania mechanics liens -- filed by unpaid contractors, subcontractors, or suppliers -- attach to property at the Court of Common Pleas. If a lien was filed by a prior owner's contractor and indexed correctly but missed during the title search, the title insurer is responsible for defending or paying the claim. If the lien was properly indexed and the title company simply failed to catch it, you may have a professional liability claim against the title agent in addition to the insurance claim. Note the important distinction: standard title policies exclude mechanics liens for work authorized by the current owner after closing. For investors doing renovation work, this exposure belongs to the next buyer's title process, not the policy you received when you bought. See our mechanics lien guide for more.
Philadelphia's probate process -- handled through the Register of Wills and Orphans' Court -- involves significant paperwork and can create chain-of-title issues. Forged Letters Testamentary, disputed estate sales, and undisclosed heirs are real risks in properties that have passed through multiple estates. If you are buying an estate sale or inherited property, the title search is doing important work. See our inherited property guide for a full breakdown of estate-related risks.
When you engage a title company, they conduct a title search -- a review of public records to trace the chain of ownership and identify any recorded encumbrances. In Philadelphia, this involves searching multiple systems:
The title search does not include L&I records, open permit status, 311 complaint history, zoning compliance, or environmental conditions. Those are regulatory compliance records, not ownership records, and they are outside the scope of a title search by design.
Two levels of title insurance protection are available to Pennsylvania buyers:
| Feature | Standard (CLTA) Policy | ALTA Extended Coverage Policy |
|---|---|---|
| Chain of title defects | Covered | Covered |
| Unknown recorded liens | Covered | Covered |
| Survey encroachments | Excluded | Covered (with survey) |
| Unrecorded easements | Excluded | Covered |
| Access rights (easement gaps) | Limited | Covered |
| L&I violations | Not covered | Not covered |
| Open permits | Not covered | Not covered |
| Zoning violations | Not covered | Not covered |
| Environmental hazards | Not covered | Not covered |
For most Philadelphia rowhouse purchases, a standard policy is typical. For properties with survey ambiguity -- corner lots, oddly shaped lots, properties with shared walls whose ownership is unclear -- ALTA extended coverage is worth the additional premium, typically 20 to 30 percent more than the standard rate.
Investors buying Philadelphia rental properties, flips, or commercial real estate face a few title issues that don't apply to owner-occupant buyers.
Many investors take title in an LLC for liability protection. Title insurance can be issued to an LLC just as it can to an individual. However, some lenders require a personal guarantee when the borrower is an LLC, and the title policy itself covers only the insured interest as stated in Schedule A. If you intend to convey the property by transferring LLC membership interests rather than the deed, consult your attorney -- the title policy covers the LLC's interest, not any subsequent transfer of LLC ownership.
Buying at a Philadelphia sheriff's sale (tax sale or mortgage foreclosure) produces a sheriff's deed, not a warranty deed, and no seller's title representations. The successful bidder at a sheriff's sale typically cannot obtain standard title insurance until the property has "seasoned" -- most title underwriters require 6 to 24 months of ownership history after a sheriff's sale before issuing a clean policy, and conventional lenders often impose similar restrictions. Investors buying at sheriff's sale who intend to resell should discuss title seasoning timelines with their title company before bidding, and should budget for a potential quiet title action if the prior lien or ownership history is unusually complex.
Investors doing renovation work in Philadelphia create mechanics lien exposure for the buyer who purchases from them. When an investor hires contractors or subcontractors who are not paid in full, those contractors can file a mechanics lien against the property within six months of last furnishing labor or materials. The lien attaches to the property, not to the investor personally. When the investor sells, the buyer's title company will search for mechanics liens filed at the Court of Common Pleas. To protect buyers -- and to ensure a clean resale title -- investors should collect lien waivers from every contractor and subcontractor at or before final payment. The standard ALTA Waiver of Mechanics Liens forms should be executed at each draw payment on larger projects. See our mechanics lien guide for the full filing timeline and waiver protocol.
There is a gap between when the title search is completed and when the deed is actually recorded at closing. During this window, a lien could be filed against the seller. Title companies address this with a bring-down search -- a final search run immediately before or at closing to verify that nothing new has been recorded since the original search. Confirm that your title company performs a bring-down search. For investor transactions involving recent renovation, this final check is especially important given the mechanics lien exposure described above.
Because title insurance covers only a narrow slice of Philadelphia property risk, buyers need to conduct independent due diligence that the title company will not do for them.
The gap buyers most often miss: Your title commitment will come back clean even if the property has 12 active L&I violations, 3 open permits, a zoning non-conformity, and a delinquent PWD account in legal status. Clean title and clean compliance are two entirely different things.
Pull the L&I record for any property before making an offer. Active violations become your responsibility at settlement. Open permits need to be resolved before or shortly after closing. Both are searchable through Philadelphia's Atlas portal, and Flagstone pulls this automatically as part of a free property report.
While a title search should catch these, it is worth verifying independently for distressed or estate properties. OPA and BRT both have publicly searchable records for tax delinquency. PWD bills can be verified online. A clean title commitment is good evidence, but for properties with complicated ownership histories a double-check is worthwhile.
If the property is being used in a non-standard way -- a second unit that may not be permitted, a commercial use in a residential zone, a home-based business -- verify zoning compliance via Atlas and the Philadelphia Zoning Code before closing. See our zoning codes guide.
A licensed home inspector is the standard protection against physical defects. This is entirely separate from both the title search and the property record check. For pre-1978 properties (nearly all of Philadelphia's housing stock), a lead paint inspection is a separate additional step worth considering, especially for rental properties. See our lead paint disclosure guide.
Pennsylvania law allows buyers to choose their own title company, and you should exercise that right. Your real estate agent or mortgage lender may recommend a title company, but they cannot require you to use a specific one, and recommending affiliated companies (controlled business arrangements) requires disclosure under RESPA.
When comparing Philadelphia title companies, ask about:
The underwriter (First American, Old Republic, Fidelity National, Stewart, etc.) matters less than the title company's search thoroughness. A thin search with a major underwriter provides less protection than a thorough search with any underwriter -- because if a lien is missed due to inadequate searching, you may have a professional liability claim against the title agent regardless of which underwriter backs the policy.
Violations, open permits, tax status, 311 history, flood zone, lead service line -- all the things title insurance won't tell you. Flagstone checks 8 official Philadelphia data sources in one free report.
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