Why Title Insurance?
real estate is one of the most precious values of freedom in this
country. You want the assurance that the property you are buying will be
yours. Other than your mortgage holder, no one else should have any
claims or restrictions against your home.
Title insurance is
issued after a careful examination of the public records. But even the
most thorough search cannot absolutely assure that no title faults are
present, despite the knowledge and experience of professional title
examiners. In addition to matters shown by public records, other title
problems may exist that cannot be disclosed in a search. Title insurance
eliminates any risks and losses caused by faults in title from an event
that occurred before you owned the property.
Title insurance is
different from other types of insurance in that it protects you, the
insured, from a loss that may occur from matters or faults from the
past. Other types of insurance such as auto, life, or health cover you
against losses that may occur in the future. Title insurance does not
protect against any future faults, but does protect you from risks or
undiscovered interests. Another difference is that you pay a one-time
premium for a policy that remains effective until the property is sold
to a new owner - even if that doesn't occur for decades.
What is a Lender's Policy?
lender's policy, also known as a loan policy or a mortgage policy,
protects the lender against loss due to unknown title defects. It also
protects the lender's interest from certain matters which may exist, but
may not be known at the time of the sale.
This policy only
protects the lender's interest. It does not protect the purchaser. That
is why a real estate purchaser needs an owner's policy.
What is an owner's policy?
owner's policy protects you, the purchaser, against a loss that may
occur from a fault in the ownership or interest you have in the
property. You should protect the equity in your new home with a title
What does an owner's policy provide?
from financial loss due to demands that may be charged against the
title to your home, up to the cost of the title policy.
Payment of legal costs if the title insurer has to defend your title against a covered claim.
Payment of successful claims against the title to your home covered by the policy, up to the cost of the policy.
Why the seller needs to provide title insurance?
purchaser will need evidence that his investment in your property is
free of title defects. The title insurance policy that you provide the
purchaser is a guarantee that you are selling a clear title to your real
estate, unencumbered by any legal attachments that might limit or
jeopardize ownership. It will reassure your purchaser that he or she is
protected from any risks or losses and could help you close your deal.
Why the buyer needs title insurance?
title insurance, you may not be fully protected against errors in
public records, hidden defects not disclosed by the public records, or
mistakes in examination of the title. As a result, you may be held fully
accountable for any prior liens, judgments or claims brought against
your new property. If this should occur, your title policy insures that
you will be defended at no cost against all covered claims up to the
amount of the policy.
How much does title insurance cost?
insurance commission approves and controls the premiums for title
insurance policies. The premiums are paid only once and the cost depends
upon the purchase price of the property and the policy amount must be
equal to the purchase price.
What does title insurance protect from?
- Undisclosed heirs
- Forged deeds, mortgages, wills, releases and other documents
- False impersonation of the true land owner
- Deeds by minors
- Documents executed by a revoked or expired Power of Attorney
- False affidavits of death or heirship
- Probate matters
- Deeds and wills by persons of unsound mind
- Conveyances by undisclosed divorced spouses
- Rights of divorced parties
- Deeds by persons falsely representing their marital status
- Adverse possession
- Defective acknowledgements due to improper or expired notarization
- Forfeitures of real property due to criminal acts
- Mistakes and omissions resulting in improper abstracting
- Errors in tax records