| What is a title? |
| A title is the foundation of property ownership.
It is the owner’s right to possess and
use the property. |
|
| Why is transferring the title
to real estate different from transferring the
title to other items, such as a car? |
| Because land is permanent
and can have many owners over the years, various
rights in land may have been acquired by others
(such as mineral, air or utility rights) by the
time you come into possession of it, even if
the land has never before been built upon. So
in order to transfer a clear title to a piece
of land, it is first necessary to determine whether
any rights are outstanding. |
|
| What is a title search? |
| A title search is a
detailed examination of the historical records
concerning a property. These records include
deeds, court records, property and name indexes,
and many other documents. The purpose of the
search is the verify the seller’s right
to transfer ownership, and to discover any claims,
defects and other rights or burdens on the property. |
|
| What kind of problems can a
title search reveal? |
| A title search can show
a number of title defects and liens, as well
as other encumbrances and restrictions. Among
these are unpaid taxes, unsatisfied mortgages,
judgements against the seller and restrictions
limiting use of the land. |
|
| Are there any problems that
a title search cannot reveal? |
| Yes. There are some “hidden
hazards” that even the most diligent title
search may never reveal. For instance, the previous
owner could have incorrectly stated his marital
status, resulting in a possible claim by his
legal spouse. Other “hidden hazards” include
fraud and forgery, defective deeds, mental incompetence,
confusion due to similar or identical names and
clerical errors in the records. These defects
can arise after you’ve purchased your home
and can jeopardize your right to ownership. |
|
| What is title insurance? |
| Title insurance is your
policy of protection against loss if any of these
problems – even a “hidden hazard” – results
in a claim against your ownership. |
|
| How much could I lose if a
claim is filed against my property? |
| That depends on the
claim. In an extreme case, you could lose your
entire home and property – and still by
liable to pay off the balance of your mortgage.
Most claims aren’t that dramatic, but even
the smallest claim can cost you time, money and
aggravation, and you may have to pay costs for
a legal defense. |
|
| How does title insurance protect
my investment if a claim should arise? |
| If a claim is made
against your property, title insurance will,
in accordance with the terms of your policy,
assure you of a legal defense – and
pay all court costs and related fees. Also,
if the claim proves valid, you will be reimbursed
for your actual loss up to the face amount
of the policy. |
|
| If the builder of my home already
has title insurance on the property, why do I
need it again when I purchase the land from him? |
| A title policy insuring
the builder does not protect you. Also, a great
many things could have happened to the land since
the builder’s policy was issued. Liens,
judgments and unpaid taxes for which prior owners
were responsible may be disclosed after you purchase
the property – causing you aggravation
and costing you money. |
|
| Are there different types of
title insurance policies? |
| Yes. Basically there
are two different types of policies – a
loan policy and an owner’s policy. The
loan policy protects the lender’s interest
in the property as security for the outstanding
balance under the buyer’s mortgage. The
owner’s policy safeguards the buyer’s
investment or equity in the property up to the
face amount of the policy. (Title insurers in
many states offer increased policy coverage through
inflation endorsements to cover increases in
value due to inflation.) |
|
| How much does title insurance
cost? |
| Probably a lot less
than you think. Charges vary in different sections
of the country, but generally the cost of title
insurance (including search, examination and
related services) amounts to about one percent,
or less, of the cost of the property. And unlike
other insurance premiums, which must be paid
annually, a title insurance premium is paid one
time only, usually at settlement. |
|
| How long does my coverage last? |
| For as long as your
or your heirs retain an interest in the property
and, in some cases, even beyond. |
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