What is Title Insurance?
Title insurance is simply a contract between the insured (property owner or lender) and the title company. The insured agrees to pay a premium for the title policy, and should the title to the property or mortgage be challenged, the title company agrees to defend the title in court or to make good any loss suffered because of defective title. The amount of coverage is up to face value of the policy, according to the terms of the policy.
The issuance of title insurance is not merely guesswork, nor is it a wager. It is based upon careful examination of the official records of property titles, and the judgemental decisions made by skilled title examiners.
What protection do you
get from an Owner Title Policy?
An owner's policy protects the insured owner while he owns the property and after the property is sold. The premium for this protection is paid only once and the owner is insured up to the full purchase price of the property. The title policy guarantees, with limited exceptions made prior to the policy being issued, that the title to the property is free of defects as of the date the deed to the new owner was filed in the public deed records. The policy does not insure the quantity of land purchased, nor does it insure any survey matters, unless an acceptable surveyor furnishes a new survey for review.
Who uses Mortgagee Policies?
People who lend money. A mortgagee title policy guarantees that the insured lender has a vaild lien on the property. The amount of coverage decreases as the note is paid off. A mortgagee policy does not insure the property owner's interest. If the insured lender takes the property through foreclosure, the mortgagee policy would convert to an owner's title policy for the benefit of the lender/owner.
How does a Title Company
find out if the Title is Good?
Before issuing a title policy, a careful search is made of the county, state and federal records that affect real estate. This is accomplished by using our company abstract plant, which maintains references to every recorded deed, mortgage, death, divorce, etc., which might affect the property. Based upon the results of the title examination, the title company decides whether or not to issue a policy.