Titling & Closing
What is the title?
Title insurance is a type of insurance policy that protects property owners and lenders against financial loss due to defects in the title to real estate. A “title” refers to the legal ownership and rights associated with a property. Title insurance is typically purchased during the process of a real estate transaction, such as when buying a home or obtaining a mortgage.
Here are key points to understand about title insurance:
Protecting Against Title Defects:
Title insurance is designed to protect the policyholder from financial loss or legal issues arising from defects in the title. Common title defects include errors in public records, undisclosed heirs, fraud, liens, and other encumbrances.
Two Types of Title Insurance:
Owner’s Policy: This protects the property owner and lasts for as long as they own the property.
Lender’s Policy (Loan Policy): This protects the lender’s interest in the property and is usually required if the buyer is obtaining a mortgage.
Coverage Period:
The coverage period for title insurance is indefinite for an owner’s policy and typically lasts until the mortgage is paid off for a lender’s policy.
Title Search and Examination:
Before issuing a title insurance policy, a thorough title search and examination are conducted to identify any potential issues with the property’s title.
Policy Premium:
The policyholder pays a one-time premium for title insurance at the time of closing. The cost is based on the property’s purchase price or loan amount.
Benefits of Title Insurance:
Protects against financial loss related to legal challenges or defects in the title.
Offers peace of mind for property owners and lenders.
Facilitates a smoother real estate transaction by addressing potential title issues before closing.
Exclusions and Exceptions:
Title insurance policies may have exclusions or exceptions. For example, certain types of issues, such as environmental hazards or zoning violations, may not be covered.
Claims Process:
If a covered title issue arises, the policyholder can file a claim with the title insurance company. The insurer will then investigate and, if necessary, defend against the claim or compensate the policyholder for financial losses.
Title insurance is a crucial component of real estate transactions, providing protection and assurance to both property owners and lenders that the title to the property is valid and free from significant defects. It helps mitigate the risks associated with unforeseen title issues arising after the property is purchased or mortgaged.
Protect your Purchase!
Title searchers have the expertise to recognize public documents that constitute liens on real estate, including mortgages, judgments, assessments, taxes, tax warrants, and other types of liens, as well as restrictions that affect property rights such as easements, leases, covenants, and numerous other matters.
