Our Title Insurance Process
A title search is a process that is performed primarily to determine the answer to three questions:
- Does the seller have a saleable interest in the property?
- What kinds of restrictions or allowances pertain to the use of the land (real covenants, easements, or other servitude's)?
- Do any liens exist on the property which needs to be paid off at closing (mortgages, back taxes, mechanic's liens, or other assessments)?
Anyone may do a title search and documents concerning conveyances of land are a matter of public record. However, it is often the case that people choose to contact a title company to conduct an exhaustive title search. For example, a title report may also show any easements, or recorded legal rights to the property or portions of the property. A previous owner may have legally given a neighbor the right to share the driveway, or the city may have a right to strips of the property for putting power lines, communication lines, water pipes, or sewer pipes.
In the United States, the buyer of a property will usually purchase title insurance, which protects the buyer from any title problems that may arise after sale (such as liens that were missed during the title search).
The title insurance company issues a report and issues an insurance policy in support of its findings. However, title searches are most often carried out before contracting is completed between parties and sometimes during the escrow phase of a closing. A title search is also performed when an owner of a certain real property wishes to mortgage his property and the bank requires from owner to insure their transaction.
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Understanding Title Insurance : Why Title Insurance? |
•Protecting your Home Investment
•Protecting Your Largest Single Investment
•Two Kinds of Title Insurance benefit You in Two Ways
•What Does Your Premium Really Pay For?
•Title Hazards – Your Last Defense
Protecting your Home Investment
A home is usually the largest single investment any of us will ever make. When you purchase a home, you will purchase several types of insurance coverage to protect your home and personal property. Homeowner’s insurance protects against loss from fire, theft, or wind damage. Flood insurance protects against rising water. And a unique coverage known as title insurance protects against hidden title hazards that may threaten your financial investment in your home.
Protecting Your Largest Single Investment
Title insurance is not as well understood as other types of home insurance, but it is as important. You see, when purchasing home, instead of purchasing the actual building or land, you are really purchasing the title to the property – the right to occupy and use the space. That title may be limited by rights and claims asserted by others, which may limit your use and enjoyment of the property and even bring financial loss. Title insurance protects against these types of title hazards.
Other types of insurance that protect your home focus on possible future events and charge an annual premium. On the other hand, title insurance protects against loss from hazards and defects that already exist in the title and is purchased with a one-time premium.
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Two Kinds of Title Insurance benefit You in Two Ways
There are two basic kinds of title insurance:
• Lender or mortgage protection,
• Owner’s coverage.
Most lenders require mortgage insurance as security for their investment in real estate, just as they may call for fire insurance and other types of coverage as investor protection. When title insurance is provided, lenders are willing to make mortgage money available in distant locales where they know little about the market.
Owner’s title insurance lasts as long as you, the policyholder – or your heirs – has an interest in the insured property. This may even be after you have sold the property. Depending on local practices and state law where the property is located, you may pay an additional premium for an owner’s policy or you may pay a simultaneous issue charge – usually a smaller amount – for the separate lender coverage. You may even split settlement costs with the seller for the lender or owner’s policy.
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What Does Your Premium Really Pay For?
An important part of title insurance is its emphasis on risk elimination before insuring. This gives you, as the policyholder, the best possible chance for avoiding title claim and loss.
Title insuring begins with a search of public land records affecting the real estate concerned. An examination is conducted by the title agent or attorney on behalf of its underwriter to determine whether the property is insurable. The examination of evidence from a search is intended to fully report all “material objections” to the title. Frequently, documents that don’t clearly transfer title are found in the “chain,” history that is assembled form the records in a search.
Here are some examples of documents hat can present concerns:
• Deeds, wills and trusts that contain improper wording or incorrect names;
• Outstanding mortgages and judgments, or a lien against the property because the seller has not paid taxes;
• Easements that allow construction of a road or utility line;
• Pending legal action against the property that could affect a purchaser; or
• Incorrect notary acknowledgements
Through the search and the examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful preventative work cannot locate all hidden title hazards.
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Title Hazards – Your Last Defense
In spite of all the expertise and dedication that goes into a title search and examination, hidden hazards can emerge after closing, resulting in unpleasant and costly surprises.
Some examples of hazards include:
• A forged signature on the deed, which would mean no transfer of ownership to you;
• An unknown heir of a previous owner who is claiming ownership of the property;
• Instruments executed under an expiration or a fabricated power of attorney; or
• Mistakes in the public records.
Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims. All for a one-time charge at closing.
Your home is your most important investment. Before you go to closing, ask about title insurance protection, and be sure to protect your home with an owner’s title insurance policy.
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