Title Insurance is an insurance policy to protect against future loss resulting from various types of defects that may exist in the ownership of a piece of real estate.
What kind of rights am I protecting?Your rights as an owner are called “Fee” insurance. The “Fee” is a legal term that describes all the rights an owner has in a property. The rights of the Fee Owner could consist of: leases; estates of deceased people; inheritance and air rights. The good news is that as a homeowner most of the complex rights are not an issue and you are buying the whole Fee. Fee Title Insurance guarantees you that you own the whole property and no one else has a claim against your right.
What is a Title Search?A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. The purpose of the search is to verify the seller‘s right to transfer ownership, and to discover any claims, defects and other rights or burdens on the property.
What kind of problems can a title search reveal?A title search can show a number of title defects and liens, as well as other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land.
Why do I have to buy Title Insurance for the Lender?All banks require a Title Policy to be purchased for their benefit to protect their position as the holder of a lien against your property. If you don’t pay your loan the Bank is guaranteed that they are paid first if your property is foreclosed on and sold at auction. Title Insurance guarantees this by insuring them that they are in 1st Lien Position.
Are there any problems a search in title records may not reveal?Yes. there are some “hidden hazards” that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his marital status, resulting in a possible claim by his legal spouse. Other “hidden hazards‘ include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you‘ve purchased your home and can jeopardize your right to ownership.
Aren‘t I buying the same thing twice when purchasing both an Owners and Lenders Policy?You are. When you buy a property and you buy a Owners and Lenders Title Insurance Policy you pay a rate that is discounted to reflect the two types of insurance. This is called the Simultaneous Rate. Therefore, you actually pay less than if you buy it separate.
When refinancing my home why do I have to buy Title Insurance for the Bank again? Didn’t I already do so when I purchased my property and got a loan?Yes, you did get it when you got a loan and the Title Insurance you bought protected the Bank that lent you the money from any thing that happened in the past. The Insurance you buy on the date you refinance covers the Bank from the date you last refinanced up to the present. When you refinance you are entitled to a “reissue rate” that discounts the premium lower than what you paid the first time.
What protection does title insurance provide against these defects and hidden risks?Title insurance will pay for defending against any lawsuit attacking your title as insured, and will either clear up title problems or pay the insured‘s losses. For a one-time premium, an owner‘s title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.
