What Is Title Insurance?

Title insurance protects the title to the real estate that you are about to acquire. Unlike other types of insurance which protect the insured against loss due to unexpected future events, title insurance protects against loss which may occur due to events that took place in the past.

Specifically, title insurance protects the buyer against loss resulting from previously unreported land title defects, such as forgeries, deeds by persons without authority, missing heirs and numerous others.

The beneficiaries of title insurance policies generally are real estate buyers and mortgage lenders. A title insurance policy protects the named insured against title defects, liens and encumbrances existing as of the date of the policy and not excepted from coverage.

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Features of Title Insurance

Some of the important features of title insurance are listed here.

Protection: If a future claim against the title to the property results either in he loss of title to the property, or expenses to clear up title defects uncovered by such claims, title insurance will provide compensation to the insured up to the face amount of the policy.

Legal Defense: Should a future claim against the title to the property require legal defense, First American will work with the insured to provide for legal defense of the title and to pay the cost of defense, even if the defense costs exceed the face amount of the policy.

Current Information: A title search of the public records conducted prior to the issuance of the title policy reveals the rights a buyer has to the property. In addition, the search reveals the rights a buyer does not have to the property. These include easement rights others may have, as well as restrictions that may be placed upon the property, which may limit the use and development of the property. The search would uncover any unpaid taxes or mortgages, judgments against previous owners and other recorded documents which can affect title to the property.

Single Premium: For a single, one-time premium, title insurance protects the property owner against loss resulting from any title defects to the property covered in the policy for as long as the property is owned and for as long as the insured retains any obligations under a warranty of title contained in any conveyance of the property

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Forms of Title Insurance

An Owner’s Policy protects the property owner against loss resulting from
defects in the title. A Loan Policy insures that the holder of the mortgage has a valid lien on the property and indemnifies the holder of the mortgage against loss resulting from title defects insured against.

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Frequently Asked Questions

If title risks are eliminated by a title search, why do I still need a title policy?

Not all risks can be eliminated by a title search, since "hidden defects" cannot be found through an examination of the public records.

A few examples of "hidden defects" are: forgeries, undisclosed or missing heirs, identity of persons, incapacity, incompetency, failure to comply with the law, status (marital, partnerships, unincorporated companies, etc.) and errors in indexing of public records. Call our office for more examples of ways to lose your property.

Coverage against such "hidden defects" is provided to the insured by the title insurance policy.

How is the premium computed?

As opposed to other types of insurance, the premium for a title policy is paid at the time the policy(ies) is/are issued and is good for the life of the policy. The premium is based on the amount of the sales price and/or loan insured.

If my lender is getting title insurance, why do I need a policy?

An owner's title policy insures the purchaser that he owns the property subject to listed exceptions. A mortgagee's title policy insures the lender that the lien they hold is a valid lien against the property. The policies perform different functions; therefore it's not possible for one policy to cover both the purchaser and the lender.

How long am I covered by this policy?

An owner title policy insures you for as long as you and your heirs remain in ownership, or have a liability by virtue of warranties to title given by you to a purchaser. A mortgagee title policy protects the lender until the loan is paid off.

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A NUMBER OF IMPORTANT REASONS WHY YOU SHOULD CONSIDER PURCHASING OWNER'S TITLE INSURANCE

OWNER'S TITLE INSURANCE will not only protect you against these hidden risks
that would not be disclosed by even the most meticulous search of public records by the Bank attorney, but also will pay for the legal fees attendant to the defense of your title as insured.

It is a one-time charge and will probably not be available for such a small fee at any future date. In addition, there is no extra charge for an inflation rider which is added to every policy and which will increase coverage as required, up to 50% in addition to present coverage. Some of the hidden risks that may be protected against are:

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1. Forgery.

2. Fraud (misrepresentation) in connection with the execution of documents.

3. Undue influence (under pressure) on a grantor (Seller) or executor (of a will).

4. False impersonation by those purporting to owners of the property.

5. Incorrect representation of marital status of a grantor (Seller).

6. In some cases, undisclosed or missing heirs.

7. In some cases, Wills not properly probated.

8. In some cases, mistaken interpretation of wills and trusts.

9. Mental incompetence of grantors.

10. Conveyance of a minor.

11. In some cases, birth of heirs subsequent to the date of a will.