Title Insurance Questions
If I have Title Insurance, do I also need legal advice?
We Encourage you to seek legal advice. The Title Insurance policy does not take the place of legal counsel. In every real estate transaction there are many matters not covered by your policy. The coverage of the policy itself, and the specific exclusions therefrom, your rights and obligations as a seller or purchaser, the tax consequences of your transaction — we recommend that these and many other issues should all be fully discussed and explained by a qualified attorney.
What is Title Insurance?
Title Insurance is the modern method of real estate title protection. A policy of title insurance protects the insured against a partial or total loss arising out of defects, liens and encumbrances in the title to real estate.
Why do I need Title Insurance?
Under our American system, any interest in land must be recorded in the public records if the holder of that interest wants to be protected. Once it has been so recorded, all subsequent parties are presumed to know of its existence, since it is on the public record for all to see.
What is the difference between an Owner’s Policy and a Mortgage Policy? Why do I need both?
What defects are insured against?
Your title policy will protect you against any defects, not excluded from the coverage of the policy, which cause actual loss or unmarketability of title. Such defects include errors in description, errors in searching the public records, unpaid taxes, legal incompetency of parties, fraud, forgery, outstanding dower rights, defects in the execution of instruments, and many others.
How am I protected if a claim arises?
Under the terms of your policy the underwriter may, at its own expense, defend you against any adverse claim or legal action arising out of any encumbrance or other defect insured against, and may also indemnify you against any loss resulting therefrom up to the face amount of the policy.
What is the cost of Title Insurance?
The cost depends upon the face amount of the policy issued. The face amount is normally the market value of the real estate in the case of an Owner’s Policy, and the amount of the loan in the case of a Mortgage Policy. Only one premium is paid and the protection lasts as long as the insured has any interest in the property.
What is Title Insurance
What is title insurance?
An insurance policy – protecting against loss should the condition of title to land be other than as insured.
Why do I need title insurance?
When you buy a home, or any property for that matter, you expect to enjoy certain benefits from ownership. For example, you expect to be able to occupy and use the property as you wish, to be free from debts or obligations not created or agreed to by you, and to be able to freely sell or pledge your property as security for a loan. Title insurance is designed to cover these rights you bargain for.
What if I have a problem? Do I have to lose my property to make a claim?
Not at all. At the mere hint of a claim adverse to your title, you should contact your title insurer or the agent who issued your policy. Title insurance includes coverage for legal expenses which may be necessary to investigate, litigate or settle an adverse claim.
What does this cost?
The cost varies, depending mainly on the value of your property. The important thing to remember is that you only pay once, then the coverage continues in effect for so long as you have an interest in covered property. If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property, giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer gives you a mortgage to finance a purchase of covered property from you, your coverage continues to protect your security interest in the property.
If my lender gets title insurance for its mortgage, why do I need a separate policy for myself?
The lender’s policy covers only the amount of its loan, which is usually not the full property value. In the event of an adverse claim, the lender would ordinarily not be concerned unless its loan became non-performing and the claim threatened the lender’s ability to foreclose and recover its principal and interest. And, in the event of a claim there is no provision for payment of legal expenses for an uninsured party. When a loan policy is being issued, the small additional expense of an owner’s policy is a bargain.
Can you be a little more specific about the types of claims, or risks, covered by title insurance? A: Sure. First understand there are basically three different levels of coverage: Standard coverage, extended coverage, and our most comprehensive “EAGLE Policy” coverage.
Glossary of Terms
A schedule showing the principal and interest payments throughout the life of the loan.
An option of the value of a property at a given time, based on facts regarding the location, improvements, etc., of the property and surroundings.
A report on the past ability of a loan applicant to pay installment payments.
A fee charged by an attorney for preparation of legal documents for a transaction.
A fee charged by the title company to service the transaction, to escrow moneys, and to cover the documents. The amount varies with each company, usually split between buyer and seller.
Funds held by the lender for payment of taxes, insurance or other periodic debts against real property. Usually does not include maintenance fees.
Includes the coverage of Hazard Insurance plus added coverage such as personal liability, theft away from the home (items stolen from the insured’s car), and other such coverage.
An examination of property for various reasons such as, termite inspections, inspection to see if required repairs were made before funds are disbursed, etc.
Rate charged for the use of loan funds. Most often paid in arrears.
Loan Application Fee:
Paid to the lender at time of application; check with lender for amount.
The points a lender charges; may be paid by either buyer or seller on conventional loans; number of points fluctuates with mortgage money market.
As applied to condominiums and planned developments, the amount charged each unit owner to maintain the common area. Usually a monthly fee as part of the budget.
Mortgagee’s Title Policy:
Insures the lender’s lien; does not protect the buyer.
A fee made by a lender for making a real estate loan. Usually a percentage of the amount loaned, such as one percent.
Owner’s Title Policy:
Title insurance for the owner of property, rather than a lien holder.
1% of loan amount.
A penalty under a note, mortgage, or deed of trust, imposed when the loan is paid before it is due.
Private Mortgage Insurance:
Insurance against a loss by a lender (mortgagee) in the event of default by a borrower (mortgagor).
An amount paid to the real estate agent as compensation for his services.
Charged by the County Clerk to record documents in the public records.
Certified copy of restrictions (in deeds of other recorded documents) required by lender.
The measurements of the boundaries of a parcel of land, its area, and sometimes its topography.
To divide property taxes between buyer and seller proportionately to time of use, or the date of closing.
Certificates issued by tax service showing the current year’s taxes, the last year the taxes were paid, and any delinquencies to be collected at closing.