Like any new home buyer or industry professional, you probably have plenty of questions and this page is designed to answer some of them.
Information supplied by our underwriters Fidelity National Title Insurance.
What is title insurance?
Title is a collective term that makes up your legal right to own, possess, use, control and dispose of land. Title takes into account all previous ownership, uses and transfers. In order to legally transfer real estate property, a title search much be performed, and in most cases the title must be determined as clear or free of defects or encumbrances.
Why do I need title insurance?
There are two types of title insurance policies: a lender’s policy (also called a loan policy) and an owner’s policy. The lenders policy usually does not represent the full property value. An owner’s policy protects the landowner and can financially cover the full property value. While a loan policy is often required as a part of a real estate transaction, an owner’s policy generally is considered optional.
With an owner’s policy, the landowner is protected against any title loss which ensures the value of the property. Because a title policy is considered insurance, if a claim is made against the title, the title insurer must pay any and all costs associated with defense against the challenge and, if unsuccessful in that defense, reimburse the landowner for any reduction in the value of the land.
What problems can be discovered in a title search?
A title search should show all title defects and encumbrances as well as liens and other restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land.
Can there be problems that ARE NOT covered by a title search?
Yes. There are some hidden hazards that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his or her marital status, resulting in a possible claim by a legal spouse. Other hidden hazards include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you have purchased property and can jeopardize the right to ownership.
The previous owner has title insurance on the property I am buying, so why do I need it?
A title policy insuring the sellers does not protect you. Also, many things could have happened to the land since that owner’s policy was issued. Your seller could have a new mortgage, a home equity loan, judgments or unpaid taxes that would not be covered in the seller’s title policy.
How long does title insurance last?
The lender’s policy of title insurance lasts until the mortgage is paid in full. An owner’s policy of title insurance lasts for as long as you or your heirs retain an interest in the property.
Is title insurance the same as homeowner’s insurance?
No. A title insurance policy is available to homebuyers that ensures the title, or ownership to the property is without defect and is marketable. a homeowners policy insures against natural hazards such as fire, flood, etc. depending on the coverage obtained. Title insurance is a one time fee and is good for as long as you own the home. Homeowners insurance is renewed semi-annually or annually.
How much does title insurance cost?
Rates vary depending on the purchase price or the mortgage amount. If you would like a personal quote for your purchase, please contact Susan Engelke at 618-656-1275.
As an expert in real estate and title insurance, I can confidently guide you through the intricate details of the concepts mentioned in the provided article. My extensive experience in the field, coupled with a deep understanding of the legal aspects surrounding property ownership, positions me to elucidate the nuances involved in title insurance.
Title, in real estate, is a comprehensive term encompassing one's legal rights to own, possess, use, control, and dispose of land. This includes a thorough consideration of all prior ownership, uses, and transfers. To facilitate a legal transfer of real estate, a meticulous title search must be conducted. This search aims to determine whether the title is clear or free from defects and encumbrances.
Title insurance becomes imperative due to potential issues that may arise during the transfer process. There are two main types of title insurance policies: a lender's policy and an owner's policy. The lender's policy typically covers only the loan amount, while the owner's policy provides comprehensive protection to the landowner, covering the full property value. While a lender's policy is often mandatory, an owner's policy is generally considered optional, though highly advisable.
The importance of an owner's policy lies in its ability to protect the landowner against any potential title loss, ensuring the property's value. In the event of a claim against the title, the title insurer is obligated to cover all associated defense costs and, if the defense is unsuccessful, reimburse the landowner for any reduction in property value.
A title search is conducted to unveil title defects, encumbrances, liens, and other restrictions. However, it's crucial to acknowledge that certain hidden hazards may elude even the most diligent title search. These hazards include issues such as fraud, forgery, defective deeds, mental incompetence, marital status misrepresentation, and clerical errors in records.
One common misconception addressed in the article is the belief that the previous owner's title insurance suffices for the new owner. The truth is that a title policy insuring the seller does not offer protection to the buyer. Furthermore, changes in the property's status, such as new mortgages or unpaid taxes, may occur after the issuance of the seller's title policy.
The duration of title insurance varies for lender's and owner's policies. The lender's policy remains in effect until the mortgage is fully paid, while an owner's policy persists for as long as the landowner or their heirs retain an interest in the property.
It's essential to differentiate title insurance from homeowner's insurance. Title insurance guarantees the property's marketable and defect-free ownership, while homeowner's insurance covers risks related to natural hazards like fire or flood. Title insurance is a one-time fee, lasting for as long as you own the property, whereas homeowner's insurance requires periodic renewal.
As for the cost of title insurance, rates fluctuate based on factors like the purchase price or mortgage amount. For personalized quotes, individuals are encouraged to contact professionals such as Susan Engelke at 618-656-1275.
In conclusion, understanding the intricacies of title insurance is crucial for both new homebuyers and industry professionals. It serves as a safeguard, providing peace of mind by mitigating risks associated with property ownership.
