Title Insurance Claims in Nevada: What to Do When a Defect Surfaces After Closing

Buying a home or other real estate is often one of the largest financial transactions a person will make. Buyers generally expect the title search and closing process to identify major ownership problems before the transaction is completed. But some title defects may not become apparent until after closing.

A previously unknown lien, forged document, undisclosed ownership interest, recording error, boundary issue, or other title problem can create significant complications for a property owner. In some situations, the owner may turn to title insurance for protection.

Title insurance is different from most types of insurance because it generally addresses defects that already existed at the time the policy was issued but were unknown or undisclosed. The Nevada Division of Insurance explains that an owner’s title policy protects the owner, while a lender’s policy primarily protects the lender.

When a defect surfaces after closing, the property owner should not assume that the title insurer will automatically cover the problem. Coverage depends on the specific policy, its effective date, covered risks, exclusions, exceptions, endorsements, and the facts surrounding the defect.

For property owners in Las Vegas and Reno, understanding what to do immediately after discovering a potential title problem can help preserve important rights and avoid unnecessary complications.

What Does Title Insurance Actually Protect?

Title insurance is designed to protect against certain losses arising from covered title defects or claims affecting ownership interests in real property.

Before issuing a policy, a title insurer generally searches and examines the title and determines whether the title is insurable under its underwriting practices. Nevada law requires a title insurer to conduct a reasonable search and examination of title before completing or executing a title insurance policy.

The purpose of this process is to identify and address title problems before closing whenever possible.

However, title searches are not infallible. Some defects can remain undiscovered because of circumstances such as forged documents, recording problems, undisclosed interests, fraud, or other issues that were not reasonably identified during the examination.

Title insurance can provide protection against certain covered defects that existed when the policy was issued.

That is why preserving and reviewing the actual policy is one of the first steps when a title problem surfaces.

Owner’s Title Insurance vs. Lender’s Title Insurance

One of the most important distinctions for homeowners is the difference between an owner’s policy and a lender’s policy.

An owner’s title insurance policy is designed to protect the property owner’s interest.

A lender’s policy protects the lender’s security interest in the property and generally does not provide the homeowner with equivalent protection.

The Nevada Division of Insurance specifically explains that when a mortgage is involved, the lender generally requires title insurance protecting its interest, while only an owner’s policy protects the buyer’s ownership interest.

This distinction matters when evaluating a potential claim.

A homeowner who discovers a title defect should first determine whether an owner’s policy was issued and obtain a complete copy of that policy.

What Types of Title Problems Can Surface After Closing?

Title defects can take many forms.

A property owner may discover an issue involving:

• An undisclosed lien
• An unknown ownership claim
• A forged deed
• An improperly executed document
• An unreleased prior mortgage
• An undisclosed easement
• A recording problem
• A judgment affecting title
• A conflicting legal description
• A previously unknown interest in the property

Not every problem will be covered by title insurance.

Some issues may have been specifically excluded from the policy, while others may fall outside the scope of the insured interest.

The key question is therefore not simply whether a title problem exists, but whether the problem constitutes a covered risk under the policy.

What Should You Do When You Discover a Title Defect?

The first step is to preserve your documentation.

Locate your owner’s title insurance policy and gather the documents relating to the property and the newly discovered issue.

These may include:

• The deed
• Closing documents
• Title commitment
• Preliminary title report
• Survey
• Recorded documents
• Correspondence concerning the defect
• Notices or claims received from another party

You should then notify the title insurer identified in your policy.

The Nevada Division of Insurance advises consumers to contact the insurer as soon as a title-related problem is discovered and to make the claim in writing, including relevant documents and correspondence.

Keep copies of everything submitted.

Review the Policy Before Assuming the Claim Is Covered

A common mistake is assuming that title insurance covers every problem affecting the property.

It does not.

Title policies contain specific terms, conditions, exclusions, exceptions, and limitations. The Nevada Division of Insurance specifically advises consumers to review their policies and understand the limitations and exclusions of their coverage.

For example, a title commitment may have identified an easement or other matter before closing and excluded it from the final policy.

In that situation, the existence of the easement may not constitute an insured title loss.

Similarly, certain defects may have been disclosed to the buyer, excluded from coverage, or otherwise addressed in the policy documents.

A careful policy review is therefore essential before deciding whether an insurer has an obligation to provide coverage or a defense.

Does Title Insurance Cover a Defect That Was Discovered After Closing?

Potentially, yes.

The fact that the problem was discovered after closing does not necessarily mean that it is a “new” problem for insurance purposes.

Title insurance generally addresses covered defects or claims that existed at the relevant policy date but were previously unknown or undisclosed.

For example, a fraudulent deed recorded before your purchase may not be discovered until years later. Although you discovered the problem after closing, the underlying title defect may have existed before the policy was issued.

The policy language determines whether the particular defect is covered.

This is one of the fundamental differences between title insurance and insurance covering future events.

How Long Do You Have to Report a Title Insurance Claim?

Property owners should not delay reporting a potential claim simply because they are still investigating the problem.

The Nevada Division of Insurance’s consumer guide states that Nevada law requires insurers to acknowledge receipt of a title insurance claim within 20 working days after receiving notice and to accept or deny the claim within 30 working days after receiving properly executed proofs of loss.

These requirements concern the insurer’s handling of claims and should not be treated as a substitute for reviewing the specific policy or any applicable legal deadlines.

The safest approach is generally to provide notice promptly after discovering the potential defect.

Waiting unnecessarily can complicate the situation and may create arguments concerning notice or prejudice depending on the policy and circumstances.

What Happens After You File a Title Insurance Claim?

After receiving a claim, the title insurer may investigate the underlying title issue and determine whether the claim falls within the policy’s coverage.

Depending on the nature of the claim, the insurer may:

• Investigate the title history.
• Review the policy.
• Examine recorded documents.
• Communicate with the opposing claimant.
• Attempt to resolve the title issue.
• Provide a defense where the policy requires it.
• Pay covered losses subject to the policy.

The exact response depends on the claim.

A title insurance claim involving a simple recording issue may look very different from one involving competing ownership claims or litigation.

What If Another Person Claims to Own Your Property?

An ownership dispute can be particularly serious.

For example, a person may claim that a prior deed was invalid, that they inherited an interest in the property, or that a previous transfer was fraudulent.

In that situation, the dispute may involve both title insurance coverage and real estate litigation.

The title insurer may have obligations under the policy concerning the defense of covered claims, but the property owner should still understand what is being asserted and how the dispute could affect ownership.

Do not sign away property rights, acknowledge another person’s ownership claim, or agree to a settlement without understanding the legal consequences.

What If the Title Insurance Company Denies the Claim?

A title insurer may deny a claim for various reasons.

For example, the insurer may argue that:

• The defect is excluded.
• The issue was listed as an exception.
• The policy does not cover the claimed interest.
• The loss falls outside the insured coverage.
• A policy condition was not satisfied.
• The alleged defect does not constitute an insured title risk.

A denial does not necessarily mean that the matter is finished.

The property owner should obtain the denial in writing and carefully review the insurer’s stated basis.

The policy language, title history, and facts surrounding the defect should then be evaluated before deciding whether to challenge the denial.

What Legal Remedies May Be Available?

If a title dispute cannot be resolved through the insurance claim process, additional legal remedies may be available depending on the circumstances.

A property owner may need to consider an action involving:

• Title ownership
• Quiet title
• Declaratory relief
• Enforcement of an agreement
• Removal or resolution of an encumbrance
• Real estate contract claims
• Other property-related remedies

The appropriate legal action depends on the specific title defect and the parties involved.

In some cases, the title insurer may participate in resolving or defending the claim. In others, the property owner may need independent counsel to protect interests that go beyond the insurance coverage itself.

Title Defects and Future Property Sales

A title defect discovered after closing can become especially problematic if you later decide to sell the property.

A future buyer may discover the same issue during the title examination.

Depending on the nature of the defect, the issue could:

• Delay a sale.
• Prevent a clean title transfer.
• Affect financing.
• Reduce buyer interest.
• Require corrective documents.
• Lead to another title dispute.

Resolving the issue as early as possible can therefore protect both the current ownership interest and the property’s future marketability.

How a Nevada Real Estate Attorney Can Help

Title insurance claims can involve insurance policy interpretation, real estate law, title records, contracts, and litigation.

A Nevada real estate attorney can assist with:

• Reviewing the owner’s title policy.
• Evaluating the alleged title defect.
• Reviewing title commitments and closing documents.
• Analyzing exclusions and exceptions.
• Communicating with the title insurer.
• Reviewing a claim denial.
• Evaluating ownership disputes.
• Negotiating a resolution.
• Pursuing appropriate real estate litigation when necessary.

An attorney can also help determine whether the title insurance claim is the only available avenue or whether a separate legal claim should be considered.

Frequently Asked Questions

About Milan Chatterjee

This article was prepared by Milan Chatterjee, a Nevada and California licensed attorney and founder of My Real Estate Lawyer, a real estate law practice dedicated to protecting property owners, investors, landlords, homeowners, businesses, and community associations throughout Nevada.

Milan represents clients in matters involving purchase and sale agreements, property transfers, title disputes, real estate transactions, boundary and easement disputes, real estate litigation, landlord-tenant matters, HOA disputes, and complex property ownership conflicts.

He earned his Juris Doctor from UCLA School of Law and studied at New York University School of Law as a visiting student. Before entering private practice, he served as Associate Compliance Counsel at Las Vegas Sands Corporation, where he advised on corporate governance, regulatory compliance, investigations, and risk management.

Today, through My Real Estate Lawyer, Milan helps buyers, sellers, investors, homeowners, and property owners throughout Las Vegas, Reno, and Nevada navigate complex real estate transactions, title issues, and property disputes.

Conclusion

Discovering a title defect after closing can be unsettling, but it does not necessarily mean that the property owner has no protection.

Title insurance is specifically designed to address certain covered title risks that existed at the time of the policy but were unknown or undisclosed. The actual policy, however, controls the scope of coverage.

Property owners should preserve their documents, notify the insurer promptly and in writing, carefully review the policy, and avoid making decisions about ownership or settlement without understanding their legal position.

If a title insurance claim is denied or another person challenges your ownership, the matter may require more than an insurance claim. A Nevada real estate attorney can help evaluate the title defect, insurance coverage, and potential legal remedies.

If you have discovered a title problem affecting property in Las Vegas or Reno, obtaining legal guidance early can help protect your ownership rights and investment.