Everything About Title Insurance

What is a title?

• The title to a piece, or parcel, of property, is the evidence that the owner is in lawful possession of the said property.

What is title insurance?

• This is insurance that protects real estate owners and lenders against any property loss, or damage, they might experience because of liens, encumbrances, or defects in the title to the property. (Title insurance policies are subject to specific terms, conditions, and exclusions.)

How is title insurance different from other forms of insurance?

• Other forms of insurance protect you from events that are going to happen in the future. Title insurance is meant to protect you against events that happened in the property’s past, and possible claims against or by the people who owned it. A bigger difference is that title insurance is paid once, and lasts so long as you or your heirs own the property. Other forms of insurance are paid annually or monthly premiums.

Okay, what’s covered?

• A title insurance policy protects lenders and owners against “hazards of the past”.
• Protects the real estate owner and their lender from any property loss or damage experienced due to liens, encumbrances, or defects to the title.
• Others claim ownership interest, improper documentation, fraud, forgery or easements, and encroachments.

When would I need this?

• Purchasers or lenders need title insurance. If you’re purchasing a home or commercial property it’s to your benefit and in your best interest to have a title insurance policy.

How is the title policy created?

• The escrow officer, or the lender, opens the title order, then the title agent or attorney begins the title search. From all the research conducted and documents uncovered the preliminary report is issued and given to the customer for review and approval. The closing documents are recorded via the escrow instruction. Once the recording has been confirmed, and all payments and funds have been disbursed the title insurance policy is created.

What is escrow?

• Escrow is the process by which the funds in a real estate, or property, transaction are held by a third party. The third party in this case is a title company or real estate attorney until the transaction is fulfilled and finalized.

What sorts of “title policy” exist?

• There are two basic title types:
  • Owner’s coverage
    • The owner’s policy insures the buyer of the property. This form of title insurance lasts as long as you, the policyholder, or your heirs, have an interest in the property. This is also inclusive of the time after you no longer own the property.
  • Lender’s protection
    • This policy is considered a layer of security on the lender’s investment in your real estate transaction, this is an added layer of “investment protection”. This policy protects the lender’s interest in your property, so long as they hold the loan.

What does my premium pay for?

• This policy’s premium gives the owner the chance to avoid a title claim and loss, the examination conducted by your title company lets them know that the property is “insurable”. This search is intended to fully unmask, or bring to light, any possible objection or defect that could exist on the title. Issues with the documents for the title that don’t clearly transfer title, or a chain of title that makes the history of property murky can present several concerns, like:
  • Outstanding mortgages, liens, taxes, and judgments that the seller has not paid.
  • Notary acknowledgments that are incorrect.
  • Deeds, trusts, or wills containing improper names or wording.
  • Any pending legal action against the property or seller which could adversely affect the buyer.
  • Easements allowing construction of a road, and/or utility line, through the property.
• Prior to receiving the title of the property all of these issues must be clarified or paid, so you receive the completely clean title to your property.