Common Questions About Title Insurance
Why do I need Title Insurance?
Your home is the single most important and costly asset you will probably ever own. Problems with the title to your property can limit your use and enjoyment of real estate, as well as bring financial loss. Protection against hazards of title is available through a unique coverage known as title insurance. Unlike other kinds of insurance that focus on possible future events and charge an annual premium, title insurance is a one-time payment and is a safeguard against loss arising from flaws and defects already existing in the title.
Lenders Require a Policy, You Should Too!
Your Mortgage lender also has a great financial interest in the property you’re buying. Just as you do, lenders rely on the Title Insurance Policy to ensure that they won’t be impacted by unforeseen title problems that could affect them. The Lender’s Policy covers them for the amount of the loan, but decreases and eventually disappears as the loan is paid off. However, this policy does not protect your interest as a homeowner. You need to purchase a separate Owner’s Title Insurance Policy, so don’t forget to request one! The Owner’s Title Insurance Policy is ordinarily issued in the amount of the real estate purchase price and lasts as long as you – or your heirs – have an interest in the property concerned.
Risk Elimination Before Insuring
Title insuring begins with a search of the public land records for matters affecting the title to real estate concerned. The search process provides warnings of title flaws that must be dealt with before the property can change hands.
Here are some examples of typical flaws:
• Deeds, wills and trust that contain improper vesting and incorrect names
• Outstanding mortgages, judgments, tax liens
• Incorrect notary acknowledgements
Once title professionals find these title issues, they then work to remedy any problems that could keep you from having “clear” title.
Hidden Title Defects
The best title search, performed by the most experienced and capable experts, cannot ensure that no title defects exist. Some problems just aren’t revealed in public records. Your Owner’s Title Insurance Policy protects your interest in the property against such unforeseen hazards such as:
• Mistakes in recording of legal documents
• Forged deeds, releases, or wills
• Undisclosed or missing heirs, including spouses
• Deeds by persons of unsound mind
• Deeds by minors
• Deed executed under invalid or expired power of attorney
• Liens for unpaid taxes