TITLE INSURANCE

A home is usually the largest single investment any of us will ever make. Title insurance protects against loss of value from hazards and defects that may exist in the title. These hazards include fraud, forged signatures on deeds, unknown property heirs, liens, and documentation errors. If you were uninsured and your right to title is challenged, you could lose significant money defending yourself or you could lose your home. Your mortgage lender will require a loan policy of title insurance to protect their interest in the value of your property and a homeowner should purchase an owner’s policy for the very same reason.

Most insurance policies protect against losses arising out of possible future events. The primary purpose of title insurance is to prevent losses from defects in title arising out of past events.

Most insurance policies protect against losses arising out of possible future events. The primary purpose of title insurance is to prevent losses from defects in title arising out of past events.

An owner’s policy of title insurance requires the insurance provider to pay for defending against any lawsuit attacking your title as insured, and will either clear up title problems or pay the insured’s losses. For a one-time premium generally paid at closing, an owner’s title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.

From the lender’s standpoint, a refinanced mortgage is actually a brand new mortgage – complete with the same risks that may have been present originally. During the refinance process, your original mortgage is paid off – and your existing lender’s title insurance policy is rendered null and void. However, if you purchased an owner’s policy of title insurance at your original closing – that policy will remain in effect as long as you or your heirs own the property.

Probably less than you think. Charges vary in different sections of the country, but generally the cost of title insurance (including the 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.

Homeowner’s insurance typically provides protection against theft, accidental damage, or natural disaster. While these types of loss can certainly be substantial, losses from a defective title could be devastating. A home destroyed by fire can be rebuilt; but if the title to the land fails, without title insurance the homeowner could lose the right to inhabit the house as well as the land it occupies.

The lender’s policy of title insurance lasts until the mortgage is paid in full. The owner’s policy of title insurance lasts for as long as the homeowner or their heirs retain an interest in the property. Unlike other types of insurance, a title policy never goes out of effect. Even though the insured sells the property and goes out of title, the policy insuring him still is in effect via the deed he conveys the property with.

A title insurance policy provides coverage from the time of its effective date back to the origin of the title. After the property has passed to a homeowner’s heirs, if any defect prior to the policy should arise, the title insurance company would defend the title for the heirs as it would for the homeowner.

Yes. Easements, deed restrictions, zoning requirements, mortgage liens, and certain other categories of limitations on the use of property are specifically exempted, or otherwise not covered. Consult with your title insurance agent for full information on policy exemptions.

A home buyer can obtain title insurance from any licensed title insurance company. When choosing a title insurer, it is important to look for a company with expertise and experience, as well as the financial strength to provide protection should a claim arise. A real estate broker or attorney can recommend such a company.