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Home Listing Tips

Presenting Your Home

Who’s Who

Inspections

What is Escrow?

Home Warranty

Appraisals

Title Insurance

Who Pays What?

Title insurance covers the insured party for any claims and legal fees that arise out of such problems. These rights or claims remain attached to the title to the property until they are rectified.

 

  • False impersonation of the true owner of the property
  • Forged deed releases or wills
  • Instruments executed under invalid or expired power of attorney
  • Undisclosed or missing heirs
  • Mistakes in recording legal documents
  • Misinterpretations of wills
  • Deeds by persons of unsound mind
  • Deeds by minors
  • Deeds by persons supposedly single, but in fact married
  • Liens for unpaid estate, inheritance, income or gift taxes
  • Fraud

AGAINST CLAIMS TO PROPERTY.
If a claim is made against your insured title, the title insurance provider protects you by:

 

  • Defending your title, in court if necessary, at no cost to you.
  • Bearing the cost of settling the case, if it proves valid, in order to protect
    your title and maintain the possession of your property.

Title insurance gives you the assurance that possible claims on the title to the property can be discovered from the public records – have been called to your attention so that these defects can be corrected. It is insurance that, if any undiscovered claims covered by your policy arise out of the past to threaten your ownership of the real estate, it will be disposed of, or you will be reimbursed exactly as your title insurance policy provides.

Frequently Asked Questions About Title Insurance

Q) What is Title Insurance?
A) Title insurance is a policy of indemnity protecting homeowners and Lenders from financial loss in the event that certain problems develop regarding the rights of property ownership. There are often hidden title defects that even the most diligent title search will not reveal. In addition to the protection from financial loss, title insurance pays the cost of defense against the covered claim.

Q) Who needs title insurance?
A) The Seller, Buyer, and Lender all benefit from the insurance provided by title companies. Buyers and Lenders in real estate transactions want to know that the property they are involved with is insured against certain title defects. Title companies provide this needed insurance coverage subject to the terms of the policy.

Q) What types of policies are available?
A) Title companies routinely issue two types of policies: An Owner’s policy which insures you, the homebuyer, for as long as you own the home; and a Lender’s policy which insures the priority of the
Lender’s security, interest over the claims that others may have in the property.

Q) Why does the Seller Need to Provide Title Insurance?
A) Title insurance represents a guarantee that the property being sold is unencumbered by any legal notices or judgments that might limit or jeopardize ownership. Any prospective Buyer will need evidence that their real estate investment is free of title defects and isn’t likely to take the Seller’s word on that. In fact, the title insurance policy is required in most contracts of sale. Absent title insurance, the Buyer would need to thoroughly search county and other records to try to find out, and if they made a mistake in searching, they’d have no recourse.

Q) Who pays for title insurance?
A) In most regions, the Seller typically pays for the Owner’s title insurance policy as it is the Seller’s customary means of proving to the Buyer “clear title.” If the purchase is financed, the Buyer pays for the Lender’s title policy which conveys to the Lender that title is “free and clear.” If the Buyer is paying cash, there is no requirement for separate title insurance.

Q) What protection does a title policy provide?
A) A title insurance policy contains provisions for the payment of the legal fees in defense of a claim against your property which is covered under your policy. It also contains provisions for indemnification against losses which result from a covered claim. A premium is paid at the close of a transaction. Unlike other types of insurance, there are no continuing premiums due.

Q) What are my chances of ever using my title policy?
A) Not all title searches are free from defect. As such, there have been Sellers who, as an example, might find during escrow that there are undisclosed mortgages or liens on their property from an original developer. Claims against your property may not be valid, making the continuous protection of the policy all the more important. With title insurance, you could go forward with your closing as scheduled and the title company would undertake the obligation to discharge the liens and clear the title. When a title company provides legal defense against claims covered by your title insurance policy, the savings to you as a Seller for that legal defense alone will greatly exceed the one-time premium paid.