What is title insurance?
When you buy property, you want to be sure that no one else has an ownership, interest, or claim on your new property. Title insurance gives you that peace of mind. Title insurance does not guarantee that title defects do not exist, but instead protects you from claims against your property if defects covered by the policy are later discovered. You pay a one-time premium for a title policy and the coverage remains effective as long as you own the property.
Should I buy a title insurance policy?
Absolutely. When you buy property, you want to rest assured that the property will be yours and that no one else will have liens, claims or encumbrances against your property other than those disclosed to you or arranged by you (such as a mortgage). Title insurance helps prevent the potential loss of your property due to these issues. If you are buying or selling property, having a title policy protects the transaction and gives everyone involved peace of mind.
Is title insurance worth the cost?
Yes, title insurance is one of the best insurance values available. The premium you pay is based on the purchase price of your property and rates are regulated by each state. You pay only a one-time premium when you purchase your policy and this coverage lasts as long as you own your property — and will protect you even after you sell your property.
Is there a difference between a lender's policy and an owner's policy?
Yes. A lender’s policy protects the money they have loaned for the purchase of a property, and their coverage expires when the load is paid off. Virtually all lenders require a lender’s policy to protect the money they have loaned to purchase a property.
How does title insurance work?
Most types of insurance are “assumption of risk” forms of coverage and cover specific events that take place in the future. Title insurance is a “risk elimination” form of coverage and looks backwards to cover certain unknown events that may have taken place in the past.
What problems can arise with a title?
There are virtually no perfect titles. Government restrictions, utility easements, claims of adverse possession, and tax liens are examples of limitations, or defects that can impact a title. Title searches disclose many of these limitations or defects. However, there are some that may not be discovered in even the most diligent title search.
What types of claims are generally covered by title insurance?
The following are types of claims that are generally covered by a title policy.
- Forged documents, such as deeds and wills
- Fraud
- Lack of competency, capacity or legal authority of a party
- Conveyances not joined in by a necessary party — i.e.: spouse, heir, corporate officer, managing member
- Unsatisfied mortgages or record
- Incomplete or erroneous probate or lack of probate
- Mistakes in legal descriptions or recording errors
- Deed not properly recorded
- Judgments or liens against a prior owner or the property
- Unpaid real estate or inheritance taxes
If my lender gets title insurance for my mortgage, why do I need a separate policy for myself?
The lender’s policy only insures the lender's interest, covering only the amount of the mortgage loan — which typically is not the property value. Lender’s coverage also expires when the loan is paid.