Why You Need Title
Insurance
You need
title insurance to protect possibly the most important
investment you’ll ever make – the investment in your home.
If you finance your purchase, your lender will certainly insist
on title insurance.
With a title
insurance policy insuring you as owner, you have an indemnity
contract that will reimburse you for loss in the event someone
asserts a claim against your property that is covered by the
policy.
The
Loan Policy Does Not Protect You. The loan policy protects the
lender against loss due to unknown title defects. It also
protects the lender’s interest from certain matters which may
exist but not be known at the time of sale. But this
policy only protects the lender’s interest. It does not
protect you. That’s why you need an owner’s policy, which
can be issued at the same time as the loan policy for a nominal
one-time fee.
What
Danger Of Loss Can You Face?
If a lender
has title insurance protection and you don’t, what possible
danger of loss can you face? As an example, let’s say
you’ve bought a home for $100,000. You’ve made a $20,000
down payment, and your lender holds an $80,000 mortgage lien or
beneficial interest. Your lender has title insurance coverage
protecting his interest up to $80,000. But your $20,000 is not
covered.
What if some
matter arises affecting the past ownership of the property? The
title insurance company would only defend and protect the
interest of the lender. You would have to assume the financial
burden of your own legal defense. If your defense is not
successful, the result could be a total loss of title.
The title
insurance company pays the lender’s loss and is entitled to
take an assignment of your debt. You are out your down payment,
other equity in the property which you have accumulated, and
your home. And you still owe the remaining balance on your note.
How
Can There be a Title Defect if the Title has been Searched and a
Loan Policy Issued?
Title
Insurance is issued after a careful examination of copies of the
public records. But even the most thorough search cannot
absolutely assure that no title hazards are present, despite the
knowledge and experience of professional title examiners. In
addition to matters shown by public records, other title
problems may exist that cannot be disclosed in a search.
What
Title Insurance Protects Against.
Here are just
a few of the most common hidden risks that can cause a loss of
title or create an encumbrance on title:
• False
impersonation of the true owner of the property
• Forged
deed, releases or wills
•
Instruments executed under invalid or expired power of attorney
•
Undisclosed or missing heirs
• Mistakes
in recording legal documents
•
Misinterpretation of wills
• Deeds by
persons of unsound mind
• Deeds by
minors
• Deeds by
persons supposedly single, but in fact married
• Liens for
unpaid estate, inheritance, income or gift taxes
• Fraud
What
Protection Does Title Insurance Provide Against Defects and
Hidden Risks?
Title
Insurance will pay for defending against any lawsuit attacking
your title as insured, and will either clear up title problems
or pay the insured’s losses. For a one-time premium, an
owner’s title insurance policy remains in effect as long as
you, or your heirs, retain an interest in the property, or have
any obligation under a warranty in any conveyance of it.
Owner’s residential title insurance, issued simultaneously
with a loan policy, is the best title insurance value you can
receive.
By combining
expertise in risk elimination at the time of issuing a policy,
and protection against hidden risks as long as the policy
remains in effect, your title insurer protects against title
loss.
What This
Means To You.
The peace of
mind in knowing that the investment you’ve made in your home
is a safe one.
What To
Look For in a Title Company.
Size and
financial strength are good indications of a dependable title
company. But it is also important to consider the company’s
problem solving abilities. The following characteristics play an
important part:
Experience
– Experience is not just being the oldest title company. It is
the ability to use past solutions to solve current problems
effectively and creatively.
Skill –
Skill is the ability to solve your problems quickly and
accurately, using all available and appropriate resources. A
title company should offer rapid and accurate answers to title
insurance questions, and be able to handle your special needs.
Commitment to
Service – A title company should be committed to total
customer satisfaction. The people concerned with your
transaction should be able to anticipate your problems as well
as solve them
Your choice
of a title insurer is important, because your home is important.
You will want it protected with the best title insurance
available, backed by an organization with sound financial
strength and problem solving abilities.
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