|
Why
Title Insurance? A home is usually the largest single
investment any of us will ever make. When you purchase
a home, you will purchase several types of insurance
coverage to protect your home and personal property.
Homeowner's or hazard insurance protects against loss
from fire, theft or wind damage. Flood insurance protects
against rising water. And a unique coverage known as
title insurance protects against hidden title hazards
that may threaten your financial investment in your
home.
Protecting
your largest single investment!
Title
insurance is not as well understood as other types
of home insurance, but it is just as important. You
see, when
|
purchasing
a home, instead of purchasing the actual building or land,
you are really purchasing the title to the property - right
to occupy and use the space. That title may be limited by rights
and claims asserted by others, which may limit your use and
enjoyment of the property and even bring financial loss. Title
insurance protects against these types of hazards.
Other
types of insurance that protect your home focus on possible
future events and charge and annual premium. On the other
hand, title insurance protects against loss from hazard
and defects that already exist in the title and is purchased
with a one time premium.
Two
Kinds of title insurance benefit you in two ways
There
are two basic kinds of title insurance:
 Lender
or mortgagee protection
Owner's
coverage
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. When title insurance is provided, lenders are
willing to make mortgage money available in distant locales
where they know little about the market.
Owner's
title insurance last as long as you, the policyholder -
or your heirs - have an interest in the insured property.
This may be after you have sold the property.
Depending
on local practices and stat law where they property is
located, you may pay an additional premium for an owner's
policy or you may pay a simultaneous issue charge - usually
smaller amount - for the separate lender coverage. You
may even split settlement costs with the seller for the
lender or owner's policy.
What
does your premium really pay for?
An important
part of title insurance is its emphasis on risk elimination
before insuring. This gives you, as the policyholder, the
best possible chance for avoiding title claim loss.
Title
insuring begins with a search of public land records affecting
the real estate concerned. An examination is conducted
by the title agent on behalf of its underwriter to determine
whether the property is insurable. The examination of evidence
from a search is intended to fully report all "material
objections" to the title. Frequently, documents that
don't clearly transfer title are found in the "chain",
or history that is assembled of documents that can present
concerns:
Deeds,
wills and trusts that contain improper wording or incorrect
names
Outstanding
mortgages and judgments, or a lien against the property
because the seller had not paid taxes
Easements
that allow construction of a road or utility line
Pending
legal action against the property that could affect the
purchaser
Incorrect
notary acknowledgements
Through
the search and the examination, title problems are disclosed
so they can be corrected whenever possible. However, even
the most careful preventative work cannot locate all hidden
title hazards.
Hidden
title hazards - your last defense
In spite
of all the expertise and dedication that go into a title
search and examination, hidden hazards can emerge after
closing, resulting in unpleasant and costly surprises.
Some examples of hazards include:
A
forged signature on the deed, which would mean no transfer
of ownership to you
An
unknown heir of a previous owner who is claiming ownership
of the property
Instruments
executed under an expired or a fabricated power of attorney
Mistakes
in the public records
Title
insurance offers financial protection against these and
other covered title hazards. The title insurer will pay
for defending against an attack on the title as insured,
and will either perfect the title or pay valid claims -
all for a one time charge at closing.
Your
home is your most important investment. Before you go to
closing, ask about your title insurance protection, and
be sure to protect your home with an owner's title insurance
policy.
For
more information that can help you better understand title
insurance please contact our offices today and talk with
one of our representatives today!
|
