Why Do I Need
Insurance is designed to both prevent problems from occurring and to
give you a source of "protection" if they do. Real estate is one of the
most important investments you will ever make and protection should be a
How Does Title
Before a transaction involving a loan or sale of
property is completed, the title company will conduct a title search in
the county records to determine ownership, claims, encumbrances, and any
other matters which may affect the property. The results of the title
search will be disclosed on a "Commitment for Title Insurance". The
commitment will show the status of the ownership and enables the
lender or purchaser to evaluate the legal status of the title to the
property before it is acquired. The commitment is also an agreement by
the title company to issue a clear title insurance policy upon any
requirements on the commitment being met.
Problems Disclosed By The Commitment Or Preliminary Title Report?
Should the title commitment disclose any liens,
encumbrances, claims, ownership questions, or any other title problems,
they must be removed as a part of the transaction. If failed to be
removed, they could result in problems for future loans or sales. Once
all requirements under the title insurance commitment are met, the title
company can proceed with the closing and in issuing a clear title
Title Insurance Protect Me Against If All Defects Are Cleared Before I
Buy The Property?
The title insurance policy is issued only after a
thorough examination of the title has been done. Although every effort is
made to prevent title defects, there are certain defects that cannot be
disclosed by a title search. Forgery, fraud, misrepresentation, and
legal incompetence are a few examples of problems that could exist, but
cannot be disclosed by the title exam. A title insurance policy is the
best protection afforded to protect the interest of an owner or lender
against such defects.
What is the difference between a lender's policy and
There are two different types of title insurance
policies. Owner's title insurance and Lender's title insurance. An
owner's policy is issued to the purchaser in the amount of the purchase
price. This owner's policy is valid as long as the owner insured owns
the property. The Lender's policy is issued to the lender for the amount
of the loan and insures the lender of the enforceability of the mortgage
that secures the loan.
what will I
pay for title insurance?
A one time premium will be paid at closing and there
are no additional payments made to maintain coverage. An owner's policy
is based on the purchase price, and the lender's policy is based on the
mortgage amount. If both policies are issued simultaneously, a
discounted premium is always given.