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What is Title

Why do I need a Title Insurance

Title refers to the legal ownership of the home

Title insurance is purchased for a one-time payment and is a safeguard against loss arising from hazards and defects already existing in the title, with extended coverage available to cover certain future events, as well. Unlike other kinds of insurance that focus on possible future events and charge an annual premium, title insurance focuses primarily on past already existing defects in the title.

When you purchase real estate, you actually acquire the title to the property, rather than the land itself. Your title encompasses ownership, use and possession of the land. However, title to property may be limited by rights and claims asserted by others.

Problems with title can limit your use and enjoyment of real estate and have negative financial consequences. Title defects also threaten the security interest your mortgage lender holds in the property.

Protection against hazards of title is available through a unique coverage known as TITLE INSURANCE.

Two basic kinds of Title Insurance

  • Owner's coverage
  • Lender's (or mortgagee) protection.

Owner's title insurance ordinarily is issued in the amount of the real estate purchase and may last forever, even after the insured has sold the property, depending on the type of owner's policy.

By contrast, the amount of lender's title insurance necessary decreases and eventually disappears as the loan is paid off. Most lenders require mortgagee title insurance as security for their investment in real estate, just as they require fire insurance and other types of coverage as investor protection.

The title insurance process begins with a search of title records specific to the property being purchased. The search results may uncover items found in the title history that need to be corrected before a clear title can be conveyed, such as:

  • Outstanding mortgages, judgments and tax liens
  • Deeds, wills and trusts that contain improper vestings and incorrect names
  • Incorrect notary acknowledgments
  • Easements
  • Hidden Defects

In spite of the expertise and dedication that go into a search and examination, hidden defects can emerge after completion of a real estate purchase, causing an unpleasant and costly surprise.

Some examples include:

  • Previously undisclosed heirs with claims against the property
  • A forged deed that transfers no title to real estate
  • Instruments executed under expired or fabricated power of attorney
  • Mistakes in the public records

Title insurance offers financial protection against these and other hidden defects of title through negotiation by the title insurer with third parties, payment for defending against an attack on title as insured, and payment of claims.

Title Insurance A Must

Thanks to title insurance, home buyers can enjoy protection against many title claims and potential losses. When title insurance is provided, lenders are willing to make mortgage funds available in geographical areas where they know little about local market conditions.

Title insurance policies offer unique safeguards that are essential for secure investments by both real estate purchasers and lenders.