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Title Insurance Answers

What does "Title" mean?

Answer: "Title" refers to the legal ownership of your new home. The seller should provide title, free and clear of all claims by others against your new home. Claims by others against your new home are sometimes known as "liens" or "encumbrances". A title search will tell you whether the title is "clear."

What is title insurance?

Answer: Title insurance is an insurance policy that protects you against loss that could result from defects in the title of the property you are buying. The premium is paid only once and is good until the property ownership changes. Unlike most types of insurance which protect policyholders from future events, title insurance protects you against defects that could already exist.

Why do I need title insurance?

Answer:  After exhaustive title search, hidden hazards can emerge after closing. Items such as mistakes in public records, previously undisclosed heirs claiming ownership of property,  or forged deeds could cloud the title. Title insurance protects you from hidden risks not revealed by the attorney's or abstractor's search. Common issues include: forgery and fraud, unpaid taxes, undisclosed or missing heirs, missed easements, conveyance by a minor, incorrect legal descriptions, incorrect indexing at the courthouse, and mental incompetence of grantors.

How does a title insurance policy protect you?

Answer: If a claim is made against your title as covered by your policy, your insurance would protect you by defending your title in court if necessary with no expenses to you. It would also cover you if the claim proves to be valid. Your title insurance will bear all expenses necessary to settle and keep you in possession of your property.

What types of title insurance policies are there?

1. Owner Policies: Protects you the property owner. It's usually issued for the total purchase price of the real estate. It is purchased for a one-time fee at closing and lasts as long as you or your heirs have an interest in the property. Owner's title insurance informs you of any other interests in the property and protects you against hidden claims of ownership or interests in your property. Owner's title insurance also pays for any legal fees involved in defending a claim to your title.

2. Loan Policies: Guarantee lenders a valid lien on the property. The amount of coverage decreases as the note is paid off. If the mortgagee policy holder should foreclose, then the policy would become an owner's title policy.
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