Resources
Buying a home is, for many of us, the biggest single investment we’ll
ever make. Knowing this, most homeowners provide for the security and
safekeeping of their homes by insuring them against hazards such as
fire, theft and weather damage.
But, there is another hazard that can pose an even greater risk to homeownership. Defects in the title to your property can cause you to lose part or all of the investment in your home.
Fortunately, there is a way to protect your investment from these title defects. It comes in the form of title insurance.
What is a title?
A title is the foundation of property ownership. It’s a combination of all the elements that constitute the highest legal right to own, possess, use, control, enjoy and dispose of real estate or an inheritable right or interest therein.
What is title insurance?
Title insurance is your policy of protection against loss if any of these problems – even a “hidden hazard” – results in a claim against your ownership. Unlike other kinds of insurance that focus on possible future events and charge an annual premium, title insurance is purchased for a one-time payment and is a safeguard against loss arising from hazards and defects already existing in the title. An important part of title insurance is its emphasis on risk elimination before insuring. This means the insured has the best possible chance for avoiding title claim loss. There are two basic kinds of title insurance:
- Owners Coverage
- Lenders, or mortgagee, protection
Owners title insurance ordinarily is issued in the amount of the real estate purchase and lasts as long as the insured – or his/her heirs – have an interest in the property concerned. This may even be after the insured has sold the property.
The amount of lenders title insurance decreases and eventually disappears as the loan is paid off. Most lenders require mortgagee title insurance as security for their investment in real estate, just as they may call for fire insurance and other types of coverage as investor protection.
Why do I need Title Insurance?
Title Insurance will protect you from financial loss in the event that
problems develop regarding the rights to ownership of your property. Title
insuring begins with a search of public land records for matters affecting
the title to real estate concerned. The examination of evidence from a
search is intended to fully report all material objections to the title.
Frequently, instruments that don’t clearly pass title are found in the
chain, or records in a search. These need to be corrected before a clear
title can be conveyed. Here are some examples of instruments that can
present concerns.
- Deeds, wills and trusts that contain improper vestings and incorrect names
- Outstanding mortgages, judgments and tax liens
- Easements
- Incorrect notary acknowledgements
Through the search and the examination, title problems like these are disclosed so they can be cleared up whenever possible.
Because of title insurance, home buyers can enjoy complete protection against claim and loss.