What is title insurance?

A policy of title insurance is a contract between the insured and the insuring company relating to the title to the real property described in the policy, protecting the insured against loss of damage by reason of defects, liens or encumbrances of the insured's title existing at the date of the policy and not expressly excluded from its coverage.

The policy is issued after a search and examination of the public records is completed which shows the condition of the record title, including any money obligations outstanding against the property, easements and other matters which may affect the rights of ownership, possession and use of the property.

Title insurance protects the record title, insuring it is good subject only to the exceptions expressly set out in the policy. It also ensures against certain matters which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interest of missing heirs and status of individuals not having the right to sell property.

There are different types of policies. Owner policies are issued to real estate owners and purchasers of real estate under contract. Mortgage policies are issued to lenders.

definition

Title - The evidence or right a person has to the ownership and possession of land.

Title Insurance - Insurance against loss or damage resulting in defects or failure of title to a particular parcel of real property.

Types of Title Insurance

Mortgagee Title Insurance
Most lenders require a title insurance policy when they issue a loan. This insurance policy is referred to as a Mortgagee title insurance policy, and it is usually based on the dollar amount of the loan to be issued. The Mortgagee title insurance policy protects the lender’s interest in the property should a problem with the title arise.

Owner’s Title Insurance
Owner’s title insurance is usually issued in the amount of the real estate purchase. It is purchased for a one time fee at the closing and lasts as long as the purchaser or the purchaser’s heirs have an interest in the property. Only Owner’s title insurance fully protects a buyer should a problem arise with the title that was not uncovered during the title search. Owner’s title insurance also pays for any legal fees involved in defending a claim to the title.

Why do you need Title Insurance?

Title insurance protects the most important investment you will ever make, the investment in your home.

How can there be a title defect if the title has been searched?

Title insurance is issued after a careful examination of copies of the public record. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition, many title problems cannot even be discovered in a title search.

Some of the issues that title insurance protects against:

• False impersonation of the true owner of the property;
• Forged deed, release or wills, instruments executed under invalid or expired power of attorney;
• Undisclosed mistakes or missing facts in recorded legal documents;
• Misinterpretations of wills or deeds by persons of an unsound mind;
• Deeds by minors;
• Deeds by persons supposedly single, but in fact married;
• Fraud;
• Liens for unpaid estate, inheritance, income or gift taxes.

What protection does title insurance provide against defects and hidden risks?

Title insurance will pay for the defense against any lawsuit attacking the title it insures, and the title insurer will either clear up the title problems or pay the insured the face value of the policy less any exceptions. For a one time premium, an Owner’s title insurance policy remains in effects as long as you, or your heirs, retain an interest in the property.

What this means to you:

The peace of mind in knowing that the investment you’ve made in your home is a safe one.