Title Insurance—Protecting You Against the Unknown

 

 

You may know title insurance as being one of the fees you pay for at closing but you may not be aware of all the benefits and protections that title insurance affords you. This page will help answer those questions.

 

Title insurance is different than other types of insurance you’re more familiar with such as auto, health, and life. These types of insurance cover you for incidents that may occur in the future. Title insurance, on the other hand, insures you against events that may have happened in the past that could affect the successful closing of your transaction.

 

 

FACT: One out of Four Residential Transactions has a title issue!

 

There are relatively few properties—especially older ones—whose titles have a perfect history from their source to the present day. As properties pass from one owner to the next, there is potential for title problems to arise.

 

The process for discovering any title problems begins with doing a title search. A title search is a detailed examination of the public records concerning a property. These records include: deed, property and name indexes, tax records, court records and many other documents.

 

The purpose of the search is to discover any defects, claims, rights or burdens that may have been placed upon the property and to verify the seller’s clear right to transfer ownership. Each transfer of ownership is a "link" in what is referred to as the "chain of title." And as each transaction or link takes place, there is a possibility for a problem.

 

 

Some Typical Title Problems Include:

 

  • Unpaid judgments against current or previous owners
  • Mortgages that were paid off but never discharged 
  • Covenants and restrictions on the use of the property
  • Mechanic’s liens filed by contractors who weren’t paid for work performed

 

 

 

Hidden Hazards

 

Unfortunately, title searches are not 100% infallible. Even the most exhaustive title search performed by the most experienced title professional still can’t guarantee that no title problems exist. This is because there are certain matters that a title search won’t reveal such as:

 

  • Fraud
  • Forgery
  • Recording Errors
  • Unknown heirs claiming ownership of the property

 

 

 

How Title Insurance Protects You

 

A title insurance policy protects the homeowner and/or lender against loss from any defects in the title or claims against the property that were not discovered or missed during the title search and examination. There are two basic types of title insurance policies:

 

1) An Owner’s Policy — Protects the homeowner for the purchase price. Coverage lasts as long as you or your heirs own the property.

 

2) A Lender’s Policy — Protects the lender’s lien priority on your property in the amount of the loan. As the loan balance gets paid down, the policy coverage decreases proportionately. Once the loan is paid off, the policy expires.

 

With a title insurance policy in place, you’ll never have to worry about bearing the financial cost of paying, settling or defending yourself against claims to your ownership of the property in question. We will cover all these costs…. up to the face amount of your title insurance policy.

 

 

Have more questions about title insurance? Call us toll-free today at 1-888-847-0003 or email Jennifer at J.Cassels@parkavetitle.com . We look forward to serving you!

 

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