Why do you need Title Insurance?
There are two kinds of title insurance policies – lender’s title insurance and homeowner’s title insurance. When you purchase an owner’s policy, it protects you against problems affecting the title to your property and its marketability. The lender’s policy protects the lender as the insured policy holder. Without owner’s title insurance, buyers are at risk since they have no rights to make claims under the lender’s insurance policy.
To protect possibly the most important investment you’ll ever make – the investment in your home. With a title insurance policy, the company will reimburse you for loss in the event someone asserts a claim against your property that is covered by the policy. The title insurer will defend claims at no cost to you. For far less then expensive lawsuits, a homeowner’s title insurance policy is the best protection you can get.
Any person or financial institution that lends money on real estate wants that investment protected – and it is required by law. Home Title provides mortgage title insurance policies to lenders, but this does not protect you in the event of a claim. A mortgage policy protects only the lender’s interest in the property, not the current owner. A title insurance policy protects your interest against any title defects in a piece of property.
The cost of title insurance on a piece of property is very small when compared with the benefit and security it provides. Unlike other forms of insurance, there are no annual premiums to keep the policy – there is only a one-time title insurance cost when you purchase the property.
It is crucial that you receive clear title to the property when you purchase real estate. In order to ensure that, you must first be informed of any existing rights or claims that may, in the future, threaten your title and possession to the property. Title insurance provides you with this twofold protection.
Home Title performs a diligent search of the public records for documents associated with the property and examines those recorded documents to determine if there are any rights or claims that may have an impact upon the title to the property. The title search may reveal the existence of recorded defects; liens or encumbrances upon the title such as unpaid taxes, unsatisfied mortgages, judgments and tax liens against the current or past owners; or easements, restrictions or court actions. These are reported to you prior to your purchase of the property and may be accepted, resolved or extinguished prior to your closing and the purchase of the property. In addition, you are protected against any recorded defects, liens or encumbrances upon the title that are unreported to you and which are within the coverage of the particular policy issued in the closing transaction.
The title to the property that you have purchased could be seriously threatened or lost completely by “hidden risks” – matters, rights or claims that are not shown by the public records and, therefore, are not discoverable by a home title search and examination of the public records. Forgery, incapacity of the parties, and fraudulent impersonation are examples of “hidden risks” which could provide a basis for a claim after you have purchased the property. In order to protect you against this possibility, Home Title provides title insurance coverage for such claims.
Title insurance is issued after a careful examination of the public records. According to national statistics, title companies find problems in 25% of their title searches, such as unsatisfied prior mortgages, improperly signed documents, undisclosed heirs, etc. But even the most thorough search cannot absolutely assure that no hazards are present, despite the knowledge and experience of professional title agents.
Title insurance will pay for defending against any lawsuit attacking your title as insured, and will either clear up problems or pay the insured’s losses. For a one-time premium, an owners’ title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.
An attorney’s opinion is an opinion of the quality of the title, based on a review of the public records. You are not purchasing insurance against hidden risks.