Getting Specific About What Title Insurance Covers

A title legally establishes who the legal owner of a property is, and is required by most lenders to ensure whether there are any issues. The title history of a home carries with it many different problems, like debts incurred by previous owners that could then fall on you, unpaid homeowner’s association fees, or property taxes. Another potential issue would be if a prior owner’s heirs feel they have a claim to the property and can prove they are the “rightful owner”. This sort of insurance protects you from issues that could arise after the title search is done, considering something could come up that wasn’t found in public records, title insurance will help resolve whatever claim it may be once property ownership is transferred.

The standard process for title insurance is:

1. The buyer, or their legal team, will go to a title agency to perform a title search, making sure that the property’s title is clear and the seller can legally transfer ownership to the buyer.
2. Then the title company sifts through public records and all other relevant bits of information like legal documents to determine whether there are any issues with the legal ownership of the home.
3. In all of their research a title company could uncover any easement or lien on the property and would then try to resolve them, to ensure there is no issue with the sale of a home.
4. If the title company finds the title to be clear ownership of the property can then be transferred to you.
5. You may be charged by your lender for lender’s title insurance, offering them protection in the event that an issue may impact ownership rights.

Standard coverage of this sort protects from:

• Liens, like unpaid taxes or homeowner’s association fees.
• Encroachments, or if a property owner violates the property rights of a neighbor by building or extending a structure to the neighbor’s land or property, unintentionally or otherwise.
• Easements, or allowing a person or entity the right to access property that’s owned by someone else for a limited and specific purpose.
• Forged or flawed documentation, like contracts, vital records, other legal certificates, checks, and identifications.
• Conflicting wills, if a family member left a will, and later re-made the will, but never invalidated or voided the original, or left it in circulation.
• Unknown heirs to the property appear, this is avoided usually when your seller completes the estate questionnaire provided to them, and after they ask for all copies of documentation from the Register of Wills naming administrator or executor of the estate on your property.