What is title insurance?
A title insurance policy is meant to protect a home buyer and their mortgage lender from any damages or financial loss caused by any title defect that comes up or is uncovered after the title insurance policy is effective. This insurance policy covers common claims filed against a title, this includes liens, conflicting wills, and any back taxes.
What is being protected?
You will receive an owner’s policy if you decide to obtain such a policy to secure your ownership of a new property.
What does an owner’s title insurance policy cover?
Most ownership title insurance policies are a guarantee against potential hazards from the past, it is optional to obtain an owner’s policy. Your lender will likely obligate you to secure their interest in your property by getting them a lender’s title policy. Your owner’s policy protects you from any conflicting ownership claims, or will complications and disputes of that kind. Another protection is any past liens or outstanding lawsuits against the seller’s legal claim of the property are taken care of. Also, if there are any flawed or counterfeit public records, or signatures that are invalid, as well as outright forgery and fraud, undisclosed easements, or other issues that would limit, or reduce, your usage of the property and its value.
What is a title search?
A title search is the detailed examination of the historical records that concern a particular property. The records that are reviewed are deeds, court records property indexes, name indexes, and many other documents. The purpose of this search is to verify that the seller has the right to convey ownership of the property to the buyer, it would also uncover any claims, defects, or other unknown rights or liens on the property.
What are common problems found in the title search?
You can come back with a number of issues that show up on a title search like liens, defects, other encumbrances, and restrictions. There could be unpaid taxes, mortgages that were never satisfied, restrictions limiting the way you use the land you own, and restrictions that are not evident at first sight.
Why does my lender ask me to get them a lender’s title insurance policy?
It’s something that any lender will ask you to do. Helping them to secure their interest, and investment, in your property purchase. This is something that protects their position as the lender that is holding a lien against your property. If you default on your loan this guarantees that they are paid first if the property goes into foreclosure and is sold at auction. Their title insurance guarantees that they have the first lien on your property and get funds before anyone else does.
Could there be hidden issues that a title search doesn’t uncover?
This is a slippery slope. It is entirely possible that there are hidden issues or “hazards” that even the deepest title search would not uncover. If the prior owner incorrectly spelled his wife’s name with two Ls instead of one. This would mean that the spouse cannot grant you ownership of the property because her name is not Isabella, it’s Isabela. Other “hidden hazards” also include defective deeds, mental incompetence, clerical errors, and defects that could arise to challenge your right to ownership of the property.
If I refinance my property, do I need to get my lender a new policy?
Yeah, the policy you got the lender when you got your title insurance to purchase the property initially protects them from events that occurred prior to that date, you will need to get them a new refinance lender’s policy. This happens because you need to protect them from the time that you owned the property and any liens or issues that arose from that time to now.
Does title insurance defend me from defects and hidden risks?
Yeah, it should pay for defense against any lawsuit that attacks your ownership rights, and should clear up title problems or pay any of their insured’s losses. It’s a one-time premium that comes with a policy that stays in effect as long as you, or your heirs, keep an interest in the property.
If you’d like to find out more about title insurance our Gables Title Group team is ready to help you protect your biggest investment and ensure that you are able to experience our heightened level of attention to detail, which is unmatched in the industry and allows our team to add value to your real estate transaction all the way to the closing table.
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