What is title insurance?

If you’re buying a home, title insurance is a policy that protects your investment and property rights.

There are two different types of title insurance: an owner’s policy and a lender’s policy.

  1. An owner’s policy is the best way to protect your property rights. Either the buyer or seller may pay for this policy. Ask your title professional how it’s handled in your area.
  2. A lender’s policy is usually required by the lender and only protects the lender’s financial interests. The buyer typically pays for this policy, but that varies depending on geography. Ask your title professional how it’s handled in your area.

Why should I purchase owner’s title insurance?

Owner’s title insurance protects your investment in your property from certain future legal claims regarding ownership of your property. For a one-time fee, you and your heirs receive coverage for as long as you own your home. The owner’s policy also covers potential legal fees and court costs for settling claims covered by your policy.

In short, title insurance protects you from hidden risks not revealed by an examination of the public records.

Common examples of hidden risks include:

  • Forgery or Fraud
  • Missed Taxes or Mortgage Payments
  • Unknown Liens against the property
  • Property line disputes
  • Undisclosed or Missing Heirs
  • Incorrect Legal Descriptions
  • Conveyance By a Minor
  • Incorrect Indexing at the Courthouse
  • Mental Incompetence of Grantors
  • Missed Easements

What does owner’s title insurance cover?

Sometimes undiscoverable defects can come up after the title search. Under an owner’s title insurance policy, you are protected against certain undiscovered errors in the title.

Title issues include unknown:

  • Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes
  • Pending legal action against the property that could affect you
  • Unknown heir of a previous owner who is claiming ownership of the property

Unforeseeable title claims include:

  • Forgery: making a false document
    • For example, the seller misrepresents the identity of the person who sold the property.
  • Fraud: deception to achieve unfair gain
    • For example, someone steals your identity and either sells your house without your knowledge or consent, or takes out a second mortgage on the property and walks away with the money.
  • Clerical error: inconsistent paperwork and historical records
    • For example, an unforeseeable discrepancy in the property or fence line can cause confusion in ownership rights.

What is escrow?

Escrow refers to a third-party service that’s usually mandatory in a home purchase. When a buyer and seller initially arrive at a purchase agreement, they select a neutral third party to act as the escrow agent. The escrow agent collects what is known as “earnest money” from the buyer: a deposit that is equal to a small percentage of the sale price. In exchange, the seller takes the property off the market. Until the final exchange is completed, both the buyer’s deposit and the seller’s property are said to be in escrow.

What is a deed?

A deed is a legal document that conveys the ownership of a piece of real property from one person to another. It is the most common form of transferring ownership of real estate and must be signed by the grantor (the party transferring ownership) and accepted by the grantee (the party receiving ownership). The deed must also be acknowledged by a notary public or other authorized official.

What is a real estate title agency?

A real estate title agency is a company that specializes in verifying the ownership of real estate and providing title insurance for the property. They handle the title search process, ensuring that the title is free and clear of any liens or other encumbrances. They also handle the paperwork involved in the real estate transaction, including the closing documents.

What services does a real estate title agency provide?

A real estate title agency provides a variety of services related to real estate transactions. They handle the title search and verification process, provide title insurance, and handle the paperwork involved in the real estate transaction. They may also provide other services such as document preparation, title searches, and loan closing services.

How much does title insurance cost?

The cost of title insurance depends on a variety of factors, including the value of the property and the type of coverage required. Generally, title insurance costs between 0.5%-1.5% of the purchase price of the property.

Is the title insurance policy transferable?

Title insurance policies are transferable to subsequent owners of the property, provided that the new owner meets the requirements of the policy.

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