Title insurance policies insure titles to real property for owners and mortgage lenders and provide the following protections:
a) Payment of loss arising from errors in title examination or recording or which result from hidden defects.
b) Payment of legal expenses incurred to clear title defects, which threaten the lender or owner with loss.
c) Assurance that the marketability of the property remains unimpaired from title defects.
Policies are issued based upon a search and review of the public land records and other relevant documents. A thorough examination is performed to determine title ownership and any other matters affecting the property title and use of that property. Items that may affect a title include easements, restrictions, rights of way and judgment liens.
The coverage provided by a title policy is long-lived. The mortgage holder continues to be protected upon foreclosure of the insured mortgage or deed of trust. The owner of real estate is insured for as long as he or she owns the property, is the holder of a purchase money mortgage or deed of trust secured by the property, or is liable under the warranties included in his or her deed to convey the property.
Doesn't a search of the public land records determine if there are any problems with title to my property?
Yes. But title insurance does much more. If a problem arises which was the result of a mistake made during the search, or if a defect exists which is not of public record but is an insured risk, then a title policy provides you with a reimbursement against loss that you may sustain.
But I thought the bank or lending institution always had the title insured?
It usually does. But its policy only insures its own interest in your property. You could lose your equity if you do not have Owner's Title Insurance.
If I didn't have Owner's Title Insurance, how serious would a claim against my home be to me personally?
It could be very serious. It would mean you would have to pay all expenses involved with the legal defense of your rights, and could even result in complete loss of your equity if your defense is unsuccessful. Just what is a title defect? It is any one of number of things that could jeopardize your interest. It could be an unsatisfied mortgage, lien, judgment or other recorded claim against the property. A defect could also take the form of a claim by a third party such as an unknown heir or prior owner whose title was transferred by a forged or fraudulent agency.
21 Hidden Title Defects: Click here for list of 21 hidden title defects
The purchase of a home is the largest transaction most people undertake in their lives. It is also one of the largest financial risks incurred. Working with competent and experienced professionals can simplify the process, as well as assure the homebuyer of receiving the representation necessary to protect their investment. It is important to secure the services of a real estate attorney or title agent early in the process to begin an orderly and smooth settlement. Services provided typically include:
Investors Title can be of assistance to you in this process. Through daily interaction with numerous real estate attorneys and title agents, we have extensive contacts and can provide you names and references of settlement agents in your area. For referrals, references, or information about the closing process please call us at 1-800-326-4842.