What is Title Insurance?
A title insurance policy protects a real estate owner or lender against any loss or damage they might experience because of liens, encumbrances, or defects in the title to said property, or the incorrectness of the related search.
Protecting You Against Hidden Risks
Protection against loss from claims on real estate which cannot be discovered by examination of the public records is the second part of the two-fold benefit provided by Title Companies.
How Does Title Insurance Differ From Casualty Insurance?
Casualty Insurers (car, life, health, etc.) assume risk for future events, collecting monthly or annual premiums. A title policy insures the past of the real property and the people who owned it, for a onetime premium paid at the close of escrow.
How Does a Title Insurance Policy Protect Against These Dangers?
If a claim is made against your title as covered by your policy, Title Companies protect you by:
1. Defending your title, in court if necessary, at our expense.
2. Bearing the cost of settling the claim if it proves to be valid, in order to perfect your title and keep you in possession of your property.
Your Ownership of Real Estate
Real estate has always been considered man's most valuable possession. It is so basic a form of wealth that many special laws have been enacted to protect ownership of land and the buildings which stand on the land. You should realize whenever you buy property that the owner who is selling it to you has extremely strong rights as do his family and heirs.
Also, there may be others - in addition to the owner - who have "rights" in the property you are going to buy, perhaps governmental bodies, or contractors, for example.
Some of the things a title search uncovers are any unpaid taxes or mortgages judgments against previous owners, easements, and many other court actions or recorded documents which can affect title to real estate. We find and report such defects in the title to the real estate you wish to buy, so that these matters can be corrected and cleared up. It is the first benefit you receive when title insurance is ordered.
What Types Of Policies Are Available?
A standard CLTA 'Owners' policy insures the new owner, the home buyer and an ALTA or CLTA 'Lenders' policy insures the priority of the lender's security interest. An extended coverage ALTA-R (residential) policy to owners of 1-4 unit property is also offered. The ALTA Homeowner's Policy is for owners of 1-4 unit properties as well and expands the number of covered title risks to 29, including certain specified risks that may arise in the future. Some Title Companies may issue this extended coverage automatically on qualifying properties. Special Binders, Guarantees and Endorsements are also available.
How Is Title Policy Created?
After the escrow officer or lender opens the title order, Title Companies begin a search of the public records including the County Recorder, Federal and State Agencies, and County and City Offices. A Preliminary Report is issued to the customer for review and approval. All closing documents are recorded upon escrow's instruction. When recording has been confirmed, demands are paid, funds are disbursed, and the actual title policy is typed and sent to the insured.
Who Needs It?
Purchasers and lenders need title insurance to know the property they are involved with is insured against various possible title defects. Whether it's a sale, refinance, construction loan...the seller, buyer and lender all benefit.
Pay Only Once
Unlike other forms of insurance, the original premium is your only cost as long as you own the property. There are no annual payments to keep your Owners Title Insurance Policy in force.