Owning real estate is one of the most precious values of freedom in this country. You want the assurance that the property you are buying will be yours. Other than your mortgage holder, no one else should have any claims or restrictions against your home.
Title insurance is issued after a careful examination of the public records. But even the most thorough search cannot absolutely assure that no title faults are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. Title insurance eliminates any risks and losses caused by faults in title from an event that occurred before you owned the property.
Title insurance is different from other types of insurance in that it protects you, the insured, from a loss that may occur from matters or faults from the past. Other types of insurance such as auto, life, or health cover you against losses that may occur in the future. Title insurance does not protect against any future faults, but does protect you from risks or undiscovered interests. Another difference is that you pay a one-time premium for a policy that remains effective until the property is sold to a new owner – even if that doesn’t occur for decades.
Insurance which protects the lender and the homeowner against loss resulting from any defects in the title or claims against a property that was not uncovered in the title search.
A title is the evidence of right that a person has to the ownership and possession of land. It is possible that someone other than the owner has a legal right to the property. If that right can be established, this person can claim the property outright or make demands on the owner as to its use.
A lender’s policy, also known as a loan policy or a mortgage policy, protects the lender against loss due to unknown title defects. It also protects the lender’s interest from certain matters which may exist, but may not be known at the time of the sale.
This policy only protects the lender’s interest. It does not protect the purchaser. That is why a real estate purchaser needs an owner’s policy.
The insurance commission approves and controls the premiums for title insurance policies. The premiums are paid only once and the cost depends upon the purchase price of the property and the policy amount must be equal to the purchase price.
Several problems could remain undisclosed, even after the most extensive search of the public records. These hidden defects are dangerous, because it could be months or years before they become known. Yet the owner could be forced to pay large sums of money to defend these claims. When you purchase a title insurance policy, you receive protection from these and a host of other hidden defects…
– Forged deeds
– Mistakes in recording of documents
– Creditor claims
– Undisclosed heirs
– Incorrect legal descriptions
– Errors in tax records
– Incorrect or misrepresented marital status
– Undisclosed heirs
– Forged deeds, mortgages, wills, releases and other documents
– False impersonation of the true land owner
– Deeds by minors
– Documents executed by a revoked or expired Power of Attorney
– False affidavits of death or heirship
– Probate matters
– Fraud
– Deeds and wills by persons of unsound mind
– Conveyances by undisclosed divorced spouses
– Rights of divorced parties
– Deeds by persons falsely representing their marital status
– Adverse possession
– Defective acknowledgements due to improper or expired notarization
– Forfeitures of real property due to criminal acts
– Mistakes and omissions resulting in improper abstracting
– Errors in tax records
