A - A policy of Title Insurance is a contract of indemnity between the insured and the underwriter relating to the title of the land described in the policy. It protects the insured against loss of damage by reason of defects, liens or encumbrances of the insured title existing at the date of the Policy and not expressly excepted from its coverage.
The Policy is issued after a complete search and examination of the public records. It shows the condition of the record title, including any money obligations outstanding against the property, easements and other matters that may affect the rights of ownership, possession and use of the property.
Q - What Protection does Title Insurance provide?
A - It insures that the “record” title is good subject only to the exceptions expressly set out in the Policy. It also insures against certain matters, which do not appear of record. such as:
+ Protection from financial loss due to demands that may be charged against the title to your home, up to the cost of the title policy.
+ Payment of legal costs if the title insurer has to defend your title against a covered claim.
+ Payment of successful claims against the title to your home covered by the policy, up to the cost of the
These are some “hidden risks” protected under a Title Policy:
+ False impersonation of the true owner of the property by the seller or other persons previously in title policy.
+ Forged deeds, releases and other documents
+ Deeds by persons of unsound mind
+ Deeds by minors
+ Invalid documents completed by an expired attorney
+ Invalid deeds delivered after the death of the grantor
+ Deeds by supposedly single persons but actually married
+ Claims for unpaid estate inheritance and gift taxes against prior owners of your home
+ Unrecorded easements — giving one party the right to enter another party’s property.
+ Undisclosed descendants of former owners of your home or the land on which it is situated.
Q - What Risks Are Not Covered under the Policy?
A - The standard owners policy and standard mortgage policy are based on public records of the recording district in which the land is located. It does not insure against matters that would only be disclosed by actual inspection or survey of the property.
It does not insure against certain matters not shown by the public records such as:
1.easements that are unrecorded,
2.liens or money obligations (example: mechanic’s liens);
3.unrecorded utility rights of way, public or private roads, community driveways and other types of encumbrances,
4.or against the rights or claims of persons in possession of the property which are not shown by the public records.
Q - Can I obtain Protection Against Matters Not of Record?
A - Upon application, the issuing company may specially cover matters which are disclosed by a physical inspection and/or a survey of the property, subject to any exceptions which the inspection will determine to be proper. An additional risk premium is charged for this type of coverage. Insurance of this kind is called ‘extended coverage’.
Q - When will the Policy be Issued?
A - The Owners Policy of title insurance usually is issued after the deed to the buyer is ‘delivered’ and recorded. A Purchasers Policy is usually issued after both parties have executed the contract or after the signed contract has been recorded. The mortgage policy of title insurance is usually issued after the mortgage has been properly executed and recorded.
Q - If I bought Title Insurance when I Purchased the Land, Why Should I Have It Re-Issued to My Purchaser When I Sell?
A - The coverage of your policy is against all matters that appeared of record up to the date of issuance of your policy. Since that time many documents may have been recorded, some of which may affect the title to your land. Taxes and assessments may have accrued and be unpaid. There may have been court actions affecting your title. The purchaser is entitled to have full information and protection as to the condition of the title right up to the date of his purchase. In addition, there may be matters of record that could prevent either the seller or buyer from selling, buying, or mortgaging land until such matters have been cleared. These items include such things as federal tax liens, judgments, in competency actions, divorce actions and other conditions that the title search may disclose.
Q -How Are Premiums for Title Insurance Determined?
A - The amount and type of coverage provided determine the Title Insurance Premium. The title insurance premium is paid only once as the policy is effective for so long as title or "ownership" remains in the name of the insured, or his heirs or devises. Rates are filed with the insurance commissioner who regulates the activities of title insurers.
Q - How long is my coverage in effect?
A - Once purchased, title insurance remains in effect for as long as you own your property. Title insurance adds security and peace of mind to homeownership.