Tips for Understanding and Obtaining Title Insurance

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Buying a home can be a daunting process, so selecting the right title company is crucial in alleviating the potential stress during the process.

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T I P S F O R U N D E R S T A N D I N G A N D O B T A I N I N G T I T L E I N S U R A N C E :

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Understand Title Insurance.  A title insurance policy provides assurance that you actually own the property you think you own. The purchase of title insurance buys you protection based on a title search of public records that trace the chain of ownership and guarantees the title is accurate as stated. The two types of title insurance policies include:

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L E N D E R ’ S T I T L E I N S U R A N C E : Mortgage lenders in most parts of the country require lender’s title insurance.  This type of title insurance is issued in the amount of the mortgage loan and protects the lender’s security interest in the real estate. As the mortgage is being paid off the coverage amount decreases until it eventually disappears when the mortgage is fully paid.

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Owner’s Title Insurance: Owner’s title insurance is issued in the amount of the purchase price of the property. This type of title insurance will protect the buyer’s interest and the buyer will be covered for all valid claims on the title as insured. Avoid Potential Title Problems.  Before buying property it’s imperative to know what rights the seller can pass on and if anyone else may have interest in the real estate that can affect your ownership and use of the property. Challenges to ownership can include claims by heirs forged deeds and mistakes in public records. Potential problems that could restrict the rights of the buyer may arise from adjoining landowners who enforce property restrictions rights of a utility company building power lines on the property or a lien from the government for back taxes on the property.

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Get a Title Search.   The title search will determine what restrictions there may be on a property. This can be a complicated process that involves a close examination of records with the office of recorders register of deeds clerks of courts and other municipal officials. The title search uncovers records for all recorded judgments street and sewer assessments special taxes and assessments and other documents that could influence the title of the property. Regardless of how thorough the title search is there is always the possibility of problems that fail to show up when examining the public records. There is a wide list of problems that could cause financial loss or even the loss of the property if the buyer is not covered by title insurance. Know What’s Covered.  Owner’s title insurance is able to cover problems with the title that may have not shown up in the title search including: ·  mistakes made in researching the title ·  errors in public records and ·  claims that appear after the title has been issued. The title company will also cover legal fees that are incurred should you ever have to defend your right to the title against a claim on the title as insured as long as the purchaser or their heirs have an interest in the property. Title insurance excludes coverage of items the title search revealed as serious problems such as: ·  mineral and air rights ·  liens on the property ·  or difficulties related to easements. It’s best to take care of these problems before the purchase. The coverage of defects you create after purchasing the property is not included. Additional coverage such as inflation riders are available from title insurers to increase the policy liability as the property value increases. Ask if you are obtaining “survey coverage”. Survey coverage may require an additional expense but if your policy has a survey exception you will not be covered for encroachments.

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A R T E S I A N T I T L E S o u r c e s : B E T T E R B U S I N E S S B U R E A U

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