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.
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, not only are you purchasing the actual building or land, you are also purchasing the title to the property – the 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 an annual premium. On the other hand, title insurance protects against loss from defects that may already exist in the title and is purchased with a one-time premium.
Back to the top
Step One
Answer Title, depending on different circumstances, begins with a thorough title search through the public records located in county courthouses, such as, finding the record owner of the property and seeing if there are any prior liens. We will also perform searches to make sure that municipal taxes, water and sewer are current. A Superior Court judgment search is also performed to find out if there are any judgments outstanding.
Step Two
We then take all the findings and insure no discrepancies are found (unsatisfied liens, taxes, judgments, rightful owner, etc.) If problems are found, we will try to rectify and satisfy that particular problem.
Step Three
Answer Title will then order a survey through a Surveying Company so they can insure that there is no boundary disputes. (Surveys are a measurement of property lines and boundaries.)
Step Four
Once everything is satisfied through the searches, surveys and rightful ownership, a commitment is prepared.
Step Five
Answer Title will then coordinate the closing and issue the title insurance policy.
Payment
Unlike other insurances where you pay ongoing premiums, title insurance is only paid once at settlement and covers you as long as you own your home, exceptions are refinancing your loan.
What Does Your Title Insurance 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 and loss.
Title insuring begins with a search of public land records affecting the real estate concerned. An examination is conducted by the title agent or attorney 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 history that is assembled from the records in a search. Here are some examples 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 has not paid his/her taxes
- Easements that allow construction of a road or utility line
- Pending legal action against the property that could affect a purchaser
- Incorrect notary acknowledgement
Through the search and 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. (See Hidden Title Hazards)
In spite of all the expertise and dedication that go into 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 title as insured, and will either perfect the title or pay valid claims.
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.Back to the top
Links To Information On This Page:
What Does Your Title Insurance Premium Really Pay For?
