What is Title Insurance?

Title insurance protects you from losses that occur from various matters affecting the title to land. There are two basic types of policies: Owner’s policy to protect the owner, and Loan policy to protect the bank’s mortgage.

Why should I have title insurance?

There are many important advantages of having title insurance. If your title to property is challenged and you successfully defend your rights of ownership in court, there will probably be legal fees and associated costs.
 
If your defense fails, you could lose the property or, at minimum, experience a serious financial loss. An owner’s title insurance policy would protect your interest in the property and pay for the legal fees associated with the cost of your defense. According to title insurance experts, owners title insurance is necessary, even if your real estate attorney performs a title examination and assumes liability for his work.

There are
certain matters an owners title insurance policy protects against, such as forgeries or unrecorded construction liens, which the attorney or abstractor could not have discovered.

There are many important advantages of having title insurance. If your title to property is challenged and you successfully defend your rights of ownership in court, there will probably be legal fees and associated costs. If your defense fails, you could lose the property or, at minimum, experience a serious financial loss.

An owner’s title insurance policy would protect your interest in the property and pay for the legal fees associated with the cost of your defense. According to title insurance experts, owners title insurance is necessary, even if your real estate attorney performs a title examination and assumes liability for his work.

These are just some of the hidden title risks that would not be disclosed by even our most meticulous title search, but are covered by an Owner’s policy of title insurance:

  • Forgery
  • Fraud in the execution of documents
  • Undue influence on a grantor of a deed
  • False impersonation by someone purporting to be the owner to the property.
  • Undisclosed or missing heirs
  • Misinterpretation of wills and trusts
  • Mental incompetence of a grantor of a deed
  • Transfer of title by a minor
  • Heirs born after the execution of a will
  • Incorrect legal descriptions
  • Non-delivery of deeds
  • Unsatisfied claims not shown on the record
  • Deeds executed under expired or false powers of attorney
  • Confusion due to similar or identical names
  • Clerical errors in recording legal documents 

 Why do I need to buy and Owner’s policy?

Even if the bank requires a Loan Policy, it only  protects their interest. You, the homeowner, may be liable for title problems even though the bank is insured.

The Owner's policy is a one time premium that covers you throughout your ownership and after. When you are already paying for a loan policy, the additional cost for an Owner’s policy is usually small.

What is covered under a standard Owner’s Policy?

The standard Owner’s policy provides the basic coverage for a homeowner:

  • It insures that you are the owner of the property.
  • It insures against losses from any liens or encumbrances on the property except  those listed in the policy.
  • It insures against your title being rejected by a subsequent buyer because it is unmarketable due to a title defect or lien.
  • It insures you have a legal right of access to the property

The title policy not only protects you against losses due to title claims covered by the policy, it also pays for the attorney’s fees and costs in defending the title. You are covered under the policy for as long as you own the property, and also for liability after you sell the property if you provide title covenants in your deed to the new buyer.