Title Insurance FAQs
Should I get title insurance, and if so, why?
Absolutely! Title insurance protects you from financial loss if any issues arise regarding the ownership of your property. Even the most thorough title search can’t uncover every hidden defect. Title insurance not only shields you from financial loss but also covers the cost of defending against any covered claim.
Here are some common title defects that might not be detected, even with the most diligent public records search:
Impersonation of the actual property owner.
- Forged documents such as deeds or releases.
- Documents executed under false or expired powers of attorney.
- Deeds delivered without the grantor’s consent or after their death.
- Transactions involving defunct corporations.
- Unrevealed or missing heirs.
- Misinterpretations of wills.
- Deeds executed by individuals of unsound mind.
- Deeds executed by minors.
- Transactions involving foreign nationals.
- Deeds by individuals claiming to be single but are secretly married.
- Children born or adopted after the creation of a will.
- Surviving children omitted from a will.
- Errors in recording legal documents.
- Jurisdictional issues in judicial proceedings.
- Discovery of a will for an estate believed to be intestate.
- Mistakes in indexing.
- Falsified records.
- Capacity issues of foreign fiduciaries.
- Claims from creditors on property sold by heirs or devisees.
- Deeds given under duress in lieu of foreclosure.
- Unauthorized deeds under false corporate resolutions.
- Errors in tax records, such as incorrect property listings.
- Transactions involving bigamous couples.
- Defective acknowledgments.
- Federal condemnations without proper notice.
- Inadequate property descriptions.
- Corporation franchise taxes creating liens on all corporate assets.
- Incorrect reports from tax officials.
- Estate administrations for individuals absent but not deceased.
- Undisclosed divorces affecting inheritance.
- Marital rights issues from not legally finalized divorces.
- Execution of documents under duress.
An Owner’s Policy of Title Insurance safeguards you from these potential defects, which might
surface years later, leading to property loss or costly litigation, unlike a mere attorney’s title opinion.
If my lender requires title insurance, isn’t that enough protection for me?
Not quite. There are two types of title insurance. A Lender’s Policy ensures your lender has a valid lien on the property, a requirement most lenders impose on borrowers. This policy protects the lender, not you. An Owner’s Policy, however, protects your investment in the property.
Issues such as faulty estate proceedings or pending legal actions could jeopardize your equity. Should a valid claim arise, an Owner’s Policy covers the financial loss up to the sales price and includes legal defense costs.
What does title insurance cost?
The premium is a one-time fee based on your home’s value and regulated by state law. Generally, it’s less expensive than an annual auto insurance premium. A Lender’s Title Insurance Policy is available at a reduced rate when purchased with an Owner’s Policy. This single payment is made at the time of home purchase and provides coverage for as long as you own the property, and in some cases, even beyond.
What is the process for obtaining title insurance?
When purchasing a property, your closing agent or attorney will typically handle the process of obtaining title insurance for you. They will conduct a title search to identify any potential issues with the property’s title. Once the search is complete, they will arrange for the issuance of the title insurance policy.
Can title insurance be transferred to a new owner if I sell my property?
Title insurance policies are typically not transferable. When you sell your property, the new owner will need to obtain their own title insurance policy to protect their interest in the property.
What happens if a claim is made against my property?
If a claim is made against your property, you should immediately notify your title insurance company. They will investigate the claim and provide a defense if it falls within the coverage of your policy. If the claim is valid, the title insurance company will cover the financial loss up to the policy amount.
Does title insurance cover boundary disputes?
Title insurance can cover boundary disputes if they are related to issues that were not discovered during the title search. However, it is important to review your specific policy to understand the extent of the coverage provided for boundary disputes and other similar issues.
How long does title insurance coverage last?
An Owner’s Policy of Title Insurance typically lasts as long as you or your heirs hold an interest in the property. In some cases, it may even extend beyond that period, depending on the specifics of the policy
What is the difference between title insurance and homeowner’s insurance?
Title insurance and homeowner’s insurance serve different purposes. Title insurance protects against past events that could affect ownership of the property, such as title defects or legal disputes. Homeowner’s insurance, on the other hand, provides coverage for future events that could damage the property, such as fire, theft, or natural disasters. Both types of insurance are important for protecting your investment.