Title Insurance
WHAT IT IS AND WHY YOU NEED IT
Title Insurance...What It Is. Fire insurance protects you against losses from fire. Collision insurance guards you against the cost of a damaged car. Theft insurance, well, you get the idea. Title insurance protects your title to real estate that you are about to acquire. To understand why title protection is essential, we need to consider real estate for a moment.
Your Ownership of Real Estate. Real estate has always been considered man's most valuable possession. It is so basic a form of wealth that many special laws have been enacted to protect ownership of land and the buildings which stand on the land. You should realize, when you buy property, that the owner who is selling it to you has extremely strong rights, as do his family and heirs. Also, there may be others, in addition to the owners, who have "rights" in the property you are going to buy. Perhaps governmental bodies or contractors, for example. Some of the things a title search uncovers are unpaid taxes or mortgages, judgments against previous owners, easements, and many other court actions or recorded documents which can affect title to real estate. The agent will find and report such defects before you buy, so that these matters can be corrected and cleared up. After the search and clearing of any title problems, the title insurance agent closes the transaction, records the appropriate documents at the court house, and transfers title to you. The agent then issues the Owners Title Insurance Policy and the Mortgagee Title Insurance Policy to the Lender if applicable.
The Difference between an Owner’s Policy and a Mortgagee Policy. When you apply for a loan to purchase property, your lender will require that you purchase Mortgagee Title Insurance Policy for their protection. Mortgagee Title Insurance protects the mortgage company -- not you. A mortgagee's policy is issued for a specific time frame and only covers the loan amount. The policy value decreases as the loan is paid off. You need your own protection. An Owner's Title Insurance Policy has no ending date. It insures you and your heirs as long as you have an interest in the property. The policy is issued for the purchase price of the property, and an inflation rider increases the insurance amount up to 150% of the original policy value. It covers you -- and you alone, not previous owners or future buyers.
So you're safe. Right? Protecting You Against Hidden Risks. The most thorough title search is only a check of public records. It may not uncover forgery in the chain of title, undisclosed heirs, or even an easement that was granted to a utility company or neighbor and never recorded or was recorded in the wrong index at the courthouse; these are only a few examples of potential problems. There are many other hidden issues that could arise. For example, the title to the home which you have paid for, and to which you have received a deed, could be threatened or lost by such circumstances as a forgery, confusion due to similar names, or error in the records. These contingencies will be covered in your policy of title insurance.
How Does A Title Insurance Policy Protect Against These Dangers? If a claim is made against your title as covered by your policy, The Title Underwriter protects you by:
- Defending your title, in court if necessary, at our expense;
- Bearing the cost of settling the claim if it proves valid, in order to perfect your title and keep you in possession of your property.
Summarizing, Title Insurance Means This To You: It is assurance that every possible cloud on the title to the land you are buying, which can be discovered from the public records, has been called to your attention, so that such defects can be corrected before you buy. And, it is insurance that, if any undisclosed claim covered by your policy arises out of the past to threaten your ownership of real estate, it will be disposed of, or you will be reimbursed, exactly as your title insurance policy provides.
And You Pay Only Once. Unlike other forms of insurance, the original premium is your only cost as long as you own the property. There are no annual payments to keep your Owners Title Insurance Policy in force.
Finally... When you close your real estate transaction with an agent underwritten by Attorneys' Title Insurance Fund, you can be comfortable with the knowledge that, in addition to being licensed, bonded and insured, they meet the highest standards in the industry required of agents by a major national underwriter. They have already met our requirements - now they are ready to meet yours.