Title Insurance.
How do you know that you actually have good title to a property? How do you know that your claim to the owner´s bundle of rights of real estate is superior to the claim of someone else? The answer is...you don´t really ever know this for sure. This is why mortgage companies, and most property owners, purchase title insurance.
A Title Insurance Policy is issued only after a careful examination of public records, but even the most thorough title search (often dating back as many as 50 years) cannot absolutely insure that no that no title flaws exist. In addition to matters shown in the public records, other title problems may exist that cannot be uncovered by such a search.
What Title Insurance Protects Against:
- False impersonation of the true owner of the property
- Forged deeds, releases or wills
- Undisclosed or missing heirs
- Instruments executed under invalid or expired power of attorney
- Mistakes in recording legal documents
- Misinterpretations of wills
- Deeds by persons of unsound mind
- Deeds by minors
- Deeds by persons supposedly single, but in fact married
- Liens for unpaid estate, inheritance, income or gift taxes
- Fraud
...this list could go on and on.
A Title Insurance Company will pay for defending an owner´s or lender´s interest in a piece of real property against any lawsuit or claim attacking the title. This policy will either clear up title problems or pay the insured´s losses. For a one-time premium, an Owner´s Title Insurance Policy remains in effect as long as the insured, or the insured´s heirs, retain any sort of interest in the property.
A mortgage company will not make a real estate loan without having a Lender´s Title Insurance Policy to protect it. The lender wants an assurance of the quality of the title to the property which is being pledged as security for the loan. The lender´s policy does not protect the owner or borrower which leaves the owner´s equity in the property at risk in the absence of an Owner´s Title Insurance Policy. Should a title flaw exist, the property owner will have to assume all of the financial burden of his or her own legal defense. And if a defense is not successful, the result could be a total loss of title.
The best time to purchase an Owner´s Title Policy is simultaneously with a Lender´s Policy at the closing since Title Insurance Companies usually give the property owner a lower "simultaneous issue" rate on this policy.
For additional information on Title Insurance, please visit the American Land Title Association´s website at: http://www.alta.org/consumer/questions.cfm
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