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Protection of one of your biggest investments!
If you're purchasing a new home, it’s wise to make sure an Owner’s
Title Policy of Insurance is provided to you at closing, in addition to
providing a Lender’s Title Policy of Insurance to the Lender if you
are financing the home. When you are buying a home or land, you are buying
a piece of earth that has been owned by others before you. With over 100*
types of "title defects", you will want to make sure you have
100% ownership of the property you are buying and that the property is
also
free and clear from any potential claims that may arise after you purchase
the property. Unlike automobile insurance that protects you from a future
event, title insurance will protect you from any events that have occurred
in the past.
The title company that handles your closing will issue the
title policies. Similar to a life insurance policy requirement, in which
you are required to take a medical physical, your property will undergo
a thorough search of the public records at the county recorder’s
office. Any title defects found will be disclosed to you and will require
clearing
before the closing date. Sometimes these title matters can be cleared easily
by the title agent or an attorney may be required for legal process.
You're
probably thinking, if my property has gone through a thorough search at
the county recorder’s office and all matters, if any, have been
cleared, why do I need the policy of insurance? Of course we are all
human and mistakes
are made and things are missed. If a claim does arise, and you have an
Owner’s
Title Policy, your Title Agent and Underwriter will be ready to defend
you in court, if necessary, at no cost to you.
The fee structure for these policies are all different and depend on where
you reside and the location of the property being purchased. You may pay
all, half or none of the premium due to the Title Agent for these Policies.
The premium is a one time fee paid at closing. The Lender’s Title
Policy will not cover the owner or buyer for any loss that may result out
of a claim.
*Listed here are most common types of title defects:
- Missed Prior Judgment Lien, Mechanic Lien or Mortgage Lien from prior
owners
- Pre-existing violations of deed restrictions
- Delinquent land, estate
or federal taxes
- Fraud
- Improper document preparation or execution
- Inaccurate legal description
or survey
- Ineffective release of interest
by prior owner
- Ineffective release of
Judgment Lien, Mechanic Lien or Mortgage Lien
from prior or current owner
- Improper procedures of any court case relating to
the property or a probate case involving an owner, such as a minor, incompetent
person or deceased party.
The explanation provided above is designed to acquaint
you with the Title Insurance process. Every title is unique and more
complex than explained
here. Please consult an attorney if further explanation of Title Insurance
is needed.
Click here for the Real Estate Dictionary
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