FAQ
- What is title insurance?
It is an insurance policy that protects the insured against loss should the condition
of title to the land be other than as insured. Unlike other types of insurance that offer
protection against future possible occurrences,
title insurance offers protection against past occurrences which could result in a claim
at a future date. Coverage continues in effect for so long as you have an interest in the
covered property. If you should die,
the coverage automatically continues for the benefit of your heirs. If you sell your property,
giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer
gives you a mortgage to finance a purchase
of covered property from you, your coverage continues to protect your security interest
in the property. Title insurance provides the insured with "peace of mind" in
knowing that you are receiving good and marketable title to the real estate you
are purchasing.
- Why do I need title insurance?
When you buy a home, or any property for that matter, you expect to enjoy certain benefits from ownership...to
be able to occupy and use the property as you wish, to be free from debts or obligations not created or agreed
to by you, and to be able to freely sell or pledge your property as security for a loan. Title insurance is
designed to cover these rights. Without an owner's title insurance policy, you may not be fully protected against
errors in the public records, hidden defects not disclosed by the public records, or mistakes made during the
examination of the title of your new property. As a result, you may be held fully accountable for any liens,
judgments or claims brought against your new property. However, your owner's title policy insures that if such
an occasion arises, you will be defended, free of charge against all covered claims and paid up to the amount
of the policy to settle valid claims.
- What is a title search?
A title search is a thorough review or examination of the public records that pertain to real property ownership
and the rights/limitations of its use. The search period begins with the current owner(s) and extends back
in time for a period of 60 years (commonly referred to as the "chain of title"). All documents affecting
the subject property are reviewed for accuracy, completeness and proper execution. Similarly, all owners of
record during the search period are indexed to determine their ownership interests, marital status and legal
and mental capacity to enter into a contract to sell/buy real property. All conveyances must have been properly
conducted and approved by the appropriate governmental departments. Once the title search is completed, the
results are provided to a title officer who makes a determination as to the insurability of title.
- What issues can a title search reveal?
A title search can show any number of title defects, liens, and other encumbrances and restrictions. Among
these are unpaid taxes, unsatisfied mortgages, judgments against buyers/sellers and any restrictions or conditions
limiting the use of the land.
- Are there any issues a title search may not reveal?
Yes. There are some "hidden hazards" that even the most diligent title search may not reveal. For
instance, a previous owner could have incorrectly stated his marital status resulting in a possible claim by
his legal spouse. Other hidden hazards include fraud, forgery, defective deeds, mental incompetence, confusion
due to similar or identical names, and clerical errors in the City/County land records. These defects can arise
after you've purchased your home and can jeopardize your right to ownership in part or full.
- What is a HUD-1 Settlement Statement?
This is a summary of the financial portion of the real estate transaction. The title company or closing agent
is required by the Department of Housing & Urban Development to use the HUD-1 on virtually all one-family
to four-family residential real estate transactions involving a lender. The statement will list the purchase
price, loan amount, closing costs for the buyer and seller, and will show all sums being charged and disbursed
to the parties involved. It also clearly summarizes the total amount due from the purchaser.
- What does title insurance cost?
The cost varies, depending mainly on the value of your property. The important thing to remember is that you
only pay once, then the coverage continues in effect for so long as you have an interest in covered property.
If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property,
giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer gives you a mortgage
to finance a purchase of covered property from you, your coverage continues to protect your security interest
in the property.
- If I have a problem, will I lose my property to make a claim?
Not at all. At the mere hint of a claim adverse to your title, you should contact your title insurer or the
agent who issued your policy. Title insurance includes coverage for legal expenses that may be necessary to
investigate, litigate, or settle an adverse claim.
- If my lender obtains title insurance, why do I need it?
The lender's policy covers only the amount of its loan, which is usually not the full property value. In the
event of an adverse claim, the lender would ordinarily not be concerned unless its loan became non-performing
and the claim threatened the lender's ability to foreclose and recover its principal and interest. And in the
event of a claim, there is no provision for payment of legal expenses for an uninsured party. When a loan policy
is being issued, the small additional expense of an owner's policy is a bargain.
What types of risks are covered by title insurance?
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