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The purchase of a home is probably the
single largest investment you'll make in your lifetime. It is only
prudent that you want to safeguard your rights and investment. Title
insurance assures that your rights and interests to the property are as
expected, that the transfer of ownership is smoothly completed and that
you receive protection from future claims against the property. It is
the most effective, most accepted and least expensive way to protect
your ownership rights.
Because land endures over generations,
many people may develop rights and claims to a particular property. The
current owner's rights - which often involve family and heirs - may be
obscure. There may be other parties (such as government agencies, public
utilities, lenders or private contractors) who also have
"rights" to the property. These interests limit the
"title" of any buyer.
Before your real estate transaction
closes, the title company performs an extensive search of all recorded
documents related to the property. These records are then examined by
experienced title officers to determine their effect on the current
status of ownership and a report is issued to you or your agents for
review. This thorough examination generally allows any pending title
problems to be identified and cleared prior to your purchase of the
property.
If title insurance companies work to
eliminate risks and prevent losses caused by defects in the title before
the closings, why do you need a title insurance policy?
Because even after the most careful
research, some title flaws may go undetected. Among the more common
flaws to title which are not of record are forgery, invalid court
proceedings, mistaken legal interpretations, defective deeds, confusion
due to similarity of names, previously unrecognized rights of spouses
and undisclosed heirs. These problems may surface at any time in the
future.
Protection against these flaws and other
claims is provided by the title insurance policy which is issued after
your transaction is complete. Two types of policies are routinely issued
at this time: an "owners policy" which covers you, the
homebuyer for the full amount you paid for the property; and a lender's
policy which covers the lending institution over the life of the loan.
When purchased at the same time, you can obtain a substantial discount
in the combined cost of an owner's and a lender's policy. Unlike other
forms of insurance, your title insurance policy requires only one
moderate premium for a policy to protect you and your heirs for as long
as you own the property. There are no renewal premiums or expiration
date.
Each policy is a contract of
"indemnity". It agrees to assume the responsibility for legal
defense of your title for any defect covered under the policy's terms
and to reimburse you for actual financial losses up to the policy
limits. |
