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What is a title search?
A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. The purpose of the search is to verify the seller's right to transfer ownership, and to discover any claims, defects and other rights or burdens on the property.
Are there any problems that a title search cannot reveal?
Yes. There are some "hidden hazards" that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his marital status, resulting in a possible claim by his legal spouse. Other "hidden hazards" include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you've purchased your home and can jeopardize your right to ownership.
What "hidden risks" are protected under a title policy?
- False impersonation of the true owner of the property by the seller or other persons previously in title.
- Forged deeds, releases and other documents.
- Deeds by persons of unsound mind.
- Deeds by minors
- Invalid documents completed by an expired power of attorney
- Invalid deeds delivered after the death of the grantor
- Deeds by supposedly single persons but actually married
- Fraud
- Claims for unpaid estate inheritance and gift taxes against prior owners of your home.
- Unrecorded easements - giving one party the right to enter another party's property
- Undisclosed descendents of former owners of your home or the land on which it is situated
How does title insurance protect my investment if a claim should arise?If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense - and pay all court costs and related fees. Also, if the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.
Why do I need title insurance?
Owning real estate is one of the most precious values of freedom in this country. Get 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 eliminates any risks and losses caused by faults in title from an event that occurred before you owned the property.
How does title insurance differ from other types of insurance?
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.
Another difference is that you pay a one-time premium. A title insurance policy will protect you from risks or undiscovered interests.
There are two principal forms of title insurance:
- The lender's policy
- The owner's policy
What is a lender's policy?
A Lender's policy protects the mortgage holder. If there is a fault in title that results in a loss, the mortgage holder will be paid back.
What is an owner's policy?
An owner's policy protects you, the purchaser, against a loss that may occur from fault in your ownership or interest you have in the property. You should protect the equity in your new home with a title policy.
What does an owner's policy provide?
- Protecting from financial loss due to demands that may be charged against the title to your home, up to the cost of the title policy.
- Payment of legal costs if the title insurer has to defend your title against a covered claim.
- Payment of successful claims against the title to your home covered by the policy, up to the cost of the policy.
Charges vary in different sections of the country, but generally the cost of title insurance (including search, examination and related services) amounts to about one percent, or less, of the cost of the property. And unlike other insurance premiums, which must be paid annually, a title insurance premium is paid one time only, usually at settlement.
How long does my coverage last?For as long as you or your heirs retain an interest in the property and, in some cases, even beyond.
Where can I get title insurance?From any licensed title insurance company or its representatives working in your state. When choosing a title insurer, it is important that you look for a company with expertise and experience, as well as the financial strength to protect you should a claim arise.
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