Title insurance is a contractual obligation between a homeowner and/or lender and the title insurance company, wherein the insurer, in exchange for a premium payment, provides protection against future losses that might result from a variety of possible title defects or encumbrances that existed at the time of closing.
Before you purchased your home, it may have gone through several ownership changes, and the land on which it stands went through many more. There may be a weak link at any point in the chain that could emerge to cause trouble. For example, someone along the way may have forged a signature in transferring title. Or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party for any claims and legal fees that arise out of such problems.
• Some common examples of problems covered by title insurance include:
• Improper execution of documents;
• Mistakes in recording of legal documents;
• Mistakes in the indexing of legal documents;
• Mistakes in legal descriptions of property;
• Forgeries and fraud;
• Undisclosed or missing heirs;
• Unpaid taxes and assessments;
• Unpaid judgments and liens;
• Unreleased mortgages;
• Incorrect interpretation of wills;
• Mental incompetence of grantors of property;
• Impersonation of the true owners of the land by fraudulent persons;
• Fraud in securing essential signatures;
• Refusal of lender to provide financing based upon condition of title;
• Refusal of potential purchaser to accept title based upon condition of title.
There are some title defects that cannot be uncovered with even the most thorough search. For example, a search will not uncover that a valid deed was indexed improperly in the land records. Title insurance will protect you from these types of defects.
Although highly recommended by experts, you do not have to purchase owner's title insurance for a home. The vast majority of banks and other mortgage lenders, however, require that the borrower obtain a Lender's Policy of Title Insurance equal to the loan amount.
A lender's policy protects the lender up to the amount of their outstanding debt on a mortgaged property. The value of the policy decreases as the loan principal is paid down and expires when the mortgage is paid in full.
An owner's policy is purchased in an amount equal to the purchase price and does not expire when the mortgage loan is paid in full or upon the sale of the property. The owner's policy is there to protect the owner's equity in the property.
Often, local custom dictates the buyer pays for the premium, but sometimes sellers and buyers negotiate who will pay the premium without regard for local customs and procedures.
While the title insurance policy is issued at closing for a one-time premium, based upon the loan amount and/or purchase price, one should start shopping for title very early in the home buying/selling refinance process as possible. The preparation that leads to the title insurance policy being issued begins in the very early stages of the closing process.
Title insurance companies offer industry-standard title policies adopted by the American Land Title Association (ALTA) or an individual state's land title association.
As its name suggests, enhanced policies provide the owner additional coverages.
Examples of coverage included in an enhanced policy that are not covered by a basic policy, include:
Mechanic's Lien Coverage for work provided prior to the date of the policy;
Zoning coverage to ensure that your property is zoned for a single-family residence;
Coverage that your property is in a properly created sub-division;
Coverage in the event that you are required to remove an existing structure on the property (other than a fence or boundary wall) due to a previous owner's failure to obtain the necessary permits;
Post-closing forgeries that affect your ownership interest.
There are many title troubles that can arise to cause the loss of your home–or your business property–or your mortgage investment.
Title troubles not disclosed by the most careful search of the public records–called hidden hazards–are the most dangerous. Because of them, your abstract may be perfect, but your title worth-less. Your attorney's examination may be the finest that skill, experience and legal knowledge can produce, but your title may be fatally defective.
Owner's title insurance protects you as well as your heirs from financial loss caused by title troubles. And the title insurer, without expense to you, will defend you against any attack on the title to your property as insured. The one-time premium is small. The protection is great.
Before buying real estate, give one of our offices a call. Ask how simple it is to fully protect yourself against title loss.
Here are thirty-five title troubles that frequently occur. You may not discover them when you buy real estate–but months or years later, they can result in the loss of your property or an expensive lawsuit.
Fidelity National Title Group is the nation’s strongest and most respected providers of financial and real estate solutions. With a proud history dating back to 1847 and issuing the first title policy in 1876, they are the oldest title and Escrow Company in America and the largest, as well. Through the three major underwriters, Chicago Title, Commonwealth Land Title and Fidelity National Title, FNTG insures more title insurance policies than any other title company in the United States. FNTG’s financial strength, combined with a nationwide network of knowledgeable attorneys, and title, escrow and closing professionals, along with an unwavering commitment to fighting fraud, have earned FNTG national recognition as one of America’s most financially sound, best managed and most admired companies. Agents of FNTG provide insurances with entrepreneurial customer service, geographic diversity and unparalleled expertise. SAMPLES FROM OTHER AREAS OF THE COMPANY: FNTG offers unmatched protection for residential and commercial properties with the largest claims reserves in the industry. FNTG’s financial strength is second to none for the security of our policyholders.
FNTG’s financial strength, combined with a nationwide network of knowledgeable attorneys, and title, escrow and closing professionals, along with an unwavering commitment to fighting fraud, have earned FNTG national recognition as one of America’s most financially sound, best managed and most admired companies. Accolades bestowed on the company over the past decade include: Named to the Fortune 500 on an annual basis, selected by Fortune’s as one of the Most Admired Companies, selected by Forbes as one of the Best Managed Companies in America. FNTG’s expertise includes Operational Excellence, Hands-On Management, Leverage of Shared Services through Technology and Disciplined Strategies. FNTG abides by six core values that represent the cornerstone of their management philosophy for operational success. These include Autonomy and Entrepreneurship, Bias for Action, Customer Oriented and Motivated, Minimize Bureaucracy, Employee Ownership and the Highest Standard of Conduct. FNTG is the nation’s leading provider of title insurance, technology and transaction services to the real estate and mortgage industries. Fidelity National Title Group is a leading provider of title insurance and escrow services, and the nation's largest title insurance company. FNTG’s title insurance underwriters collectively issue more title insurance policies than any other title company in the United States.
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