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Some Frequently Asked Questions about Owner's Title Insurance
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Is Owner's Title Insurance as important as fire or property damage protection? Emphatically yes. Loss from title deficiencies can be as great as or greater than fire or other damage. Just what is a title defect? It is any one of a number of things that could jeopardize your interest. It could be an unsatisfied mortgage, lien, judgment or other recorded claim against the property. It could arise through easements, use restrictions or other existing covenants. Or it could be a hidden risk. To name only a few of these: fraud or forgery in previous documents; improperly executed deeds; the marital status of previous owners; deeds executed under expired powers of attorney… the list could go on and on. A look at court records would reveal many instances of these and hundreds of other ways in which parties you may never have heard of could claim an interest in your home. Is Owner's Title Insurance expensive? No. Owner's Title Insurance is one of the most inexpensive forms of insurance. Rates vary from region to region and depend on the amount of service required. But the premium is surprisingly low in relation to the cost of your home - one of the most important purchases you will ever make. Does Owner's Title insurance insure against title defects? No. BUT Owner's Title Insurance does eliminate the risk of loss to you through claims against the title as described in your policy. The insuring company assumes all legal expenses involved in adjudicating claims and protects you against any loss whatsoever arising from claims attacking your title, within policy limits, even though they may occur through errors made in the public records. Why should I use Heritage Title, Ltd.? At Heritage Title, Ltd., we realize how busy you are. And because our staff is the best in the business, we know how to make the settlement process go smoothly. We do all the things you would expect of a capable title agency, and more. We search the title, complete the paperwork accurately and on time, issue title commitments and insurance policies promptly. Beyond that, however, Heritage Title, Ltd. focuses on building lasting relationships with professional credibility and integrity. We have the experience, financial strength, and personalized service that you can depend on. We're local people making local decisions, just like you. And we'll work hard to earn and to keep your confidence. The Lender's policy will not protect the owner? The loan policy does not protect the borrower. The loan policy protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of the sale. But, this policy only protects the lender's interest. It does not protect the borrower. That is why a real estate purchaser needs an owner's policy, which can be issued at the same time as the loan policy, usually for a nominal one-time fee. What is the danger of loss? If the lender has title insurance protection and the owner does not, what possible danger of loss exists? As an example, assume real estate was purchased for $100,000. A down payment of $20,000 is made, and a lender holds an $80,000 mortgage lien, or beneficial interest. The lender acquires title insurance protecting the lender's interest up to $80,000. But the purchaser's down payment of $20,000 is not covered. What if some matter arises affecting the past ownership of the property? The title insurance company would defend and protect the interest of the lender. The purchaser, however, would have to assume the financial burden of his or her own legal defense. If the defense is not successful, the result could be a total loss of title. How can there be a title defect if the title has been searched and a loan policy issued? If the lender has title insurance protection and the owner does not, what possible danger of loss exists? Title insurance is issued after a careful examination of copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. What does Owner's Title Insurance protect against? Here are just a few of the most common hidden risks that can cause loss of title or create an encumbrance on title:
What protection does Owner's Title Insurance provide against defects and hidden risks? Title insurance will pay for defending against any lawsuit attacking the title as insured, and 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 an interest in the property, or have any obligations under a warranty in any conveyance of it. Owner's title insurance, issued simultaneously with a loan policy, is the best title insurance value a property owner can get. |
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