Why do i need title insurance?
Title insurance is an insurance policy or contract issued by a title company. It protects you, the purchaser or owner, against a loss that may arise by reason of a defect in your ownership of an interest you have in real property.
In addition, the title insurance company agrees to defend you in court if there is an attack on your title. It will cover attorney and court expenses or pay a loss caused by the defect in title up to the face amount of the policy subject to the terms listed in your policy.
What are the risks?
There are numerous defects or problems that can arise to cause an attack or loss of the title to your property. Some of these include problems not disclosed by the most careful search of the public records (the title search). Hidden risks can cause a total loss of your investment or heavy legal expenses in the defense of an attack on the title.
Some title problems may show up months or years after the original purchase of the property. The following are examples of matters that can cause loss of title or an expensive lawsuit:
Forged deeds, releases, wills or other legal documents.
- Failure of spouses to join in conveyances
- Undisclosed or missing heirs
- Deeds from minors, aliens or persons of unsound mind
- Errors in indexing of public records
- Liens for unpaid taxes including estate, inheritance, income or gift taxes
- Erroneous reports furnished by tax officials
- Mistakes in recording legal documents
- Deeds from defunct corporations
- Unprobated wills
Shirlene Clincy - Branch Manager
How does title insurance protect against these
hidden risks & defects?
Title insurance defends you in lawsuit attacking your title and either corrects the title problem or pays the insured’s losses up to the face amount of the policy. The policy also protects you after you sell the property for defects occurring prior to your ownership that cause a loss to the purchaser if the title was warranted by you.
The title policy guarantees that at the date the deed was filed for record placing title in the name of the insured, the title was free of defects apart from those “excepted to” in the policy. The policy does not guarantee an actual amount of land. It guarantees that there are no buildings or other improvements belonging to someone else located on the insured land when an acceptable survey is furnished to the title company. An additional premium is paid to amend the standard survey exception.
How does title insurance differ from other types of insurance?
Title insurance is different from other types of insurance in that it protects you, the insured, from loss that may occur from matters or defects from the past. Other types of insurance such as auto insurance, life insurance or health insurance, cover you against losses that may occur in the future. Title insurance does not protect against a defect that may originate at a later date.
Lastly, it is very important that you know that:
You choose your title insurance company.
When it comes to title insurance, you have the right to choose whatever company you’d like. Although many people just rely on their attorney, mortgage lender or real estate agent to pick a title insurance company for them, ultimately the decision is yours!