Why do I Need Title Insurance?
There are many title issues that could cause you to lose your property or your mortgage investment. Even the most careful search of public records may not disclose the most dangerous threat: hidden risks. These issues may not be uncovered until years later.
Here are some of the issues that occur most frequently:
- Deeds by persons supposedly single, but secretly married
- Marital rights of spouse purportedly, but not legally, divorced
- Deeds by minors
- Deeds by persons of unsound mind
- Deeds to or from defunct corporations
- Defective acknowledgements by notaries
- Impersonation of the true owner of the land
- Discovery or will of apparent in testate
- Duress in execution of instruments
- Forged deeds, releases, etc.
- Misrepresentation of will
- Deeds delivered after death of grantor/grantee, without consent of grantor
- Mistakes in recording legal documents
- Deeds in lieu of foreclosure given under duress
- Surviving children omitted from will
- Administration of estate of persons absent but not deceased
- Birth or adoption of children after date of will
- Claims of creditors against property sold by heirs or devisees
- Deed of community property recited to be separate property
- Deeds by foreign parties
- Erroneous reports furnished by tax officials
Without title insurance from a reputable and financially solvent company, your title could be worthless. With the proper insurance, your rights will be defended in court. When you choose the title company for you next transaction, make sure they are reputable!
What is Title Insurance?
If you are borrowing money to buy a piece of real estate property . . . such as a house, condo, land, etc., the lender will require a lender’s title policy to protect their interest in the property.
A title is the collective ownership records for a piece of real property. The title includes all previous transfers of ownership and liens on the property. The title to the property outlines the legal right to own, use, possess, control or dispose of the property. In order to legally transfer real estate property, you must perform a title search to determine the title is clear or free of defects or inappropriate encumbrances.
The reason for purchasing title insurance is to protect buyer and lender if someone challenges the property title because of any alleged title defects. Most likely, such defects were unknown at the time property was purchased, but may surface at a future date. Title insurance is designed to protect from the unexpected discovery of liens or claims that may be attached to the property. The insurance provides the cost of legal fees to defend in the case of a title claim, and for the payment of losses which could result from the title claim.
In addition to providing coverage, a title insurance company examines all titles to the real property to be covered under the plan prior to issuing a policy. For a one-time fee, the company will notify owners, as well as lenders who may hold a mortgage on the property, of all defects in the title and possible future losses.
Title insurance costs and services vary from company to company, so shop around to get the best deal. If you have a real estate agent representing you in the purchase transaction, ask for a recommendation on the title company. Agents get discounts from title companies, if they send their clients to a particular title company
The premium for title insurance is paid at the closing, which is a one time charge. It is determined that the closing who pays the premium for your title insurance. In most states, the seller pays the premium for the owner’s policy and the buyer pays the premium for the lender’s policy. This arrangement is not set by law and can be negotiated between the buyer and seller. The amount of the premium is based on the amount of insurance you purchase.