Frequently Asked Questions About Title Insurance
Buying and selling a home is an exciting time, but there can be pitfalls for unsuspecting consumers . The American Land Title Association wants homeowners and sellers to be aware that criminals are using wire fraud schemes to steal money meant for home purchases or the proceeds from the sale of the property. Watch this video for four tips to protect your money and advice for what to do if you’ve been targeted by a scam.
A lender’s policy, also known as a loan policy or a mortgage 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.
This policy only protects the lender’s interest. It does not protect the purchaser. That is why a real estate purchaser needs an owner’s policy.
An owner’s policy protects you, the purchaser, against a loss that may occur from a fault in the ownership or interest you have in the property. You should protect the equity in your new home with a title policy.
Protection from financial loss due to demands that may be charged against the title to your home, up to the face amount of the title policy.
Payment of legal costs if the title insurer has to defend your title against a covered claim.
Payment of valid claims against the title to your home covered by the policy, up to the face amount of the policy.
Any purchaser will need evidence that his investment in your property is free of title defects. The title insurance policy that you provide the purchaser is a guarantee that you are selling a clear title to your real estate, unencumbered by any legal attachments that might limit or jeopardize ownership. It will reassure your purchaser and could help you close your deal.
Without title insurance, you may not be fully protected against errors in public records, hidden defects not disclosed by the public records, or mistakes in examination of the title. As a result, you may be held fully accountable for any prior liens, judgments or claims brought against your new property. If this should occur and a valid claim is filed your owner’s title policy covers the cost of legal defense in addition to your financial loss up to the face amount of the policy.
The insurance commission approves and controls the premiums for title insurance policies. The premiums are paid only once and the cost depends upon the purchase price of the property and the policy amount must be equal to the purchase price.
These are some of the most common issues that can affect your ownership interest:
- Undisclosed heirs
- Forged deeds, mortgages, wills, releases and other documents
- False impersonation of the true land owner
- Deeds by minors
- Documents executed by a revoked or expired Power of Attorney
- False affidavits of death or heirship
- Probate matters
- Issues of rightful possession of the land
- Deeds and wills by persons lacking legal capacity
- Conveyances by undisclosed divorced spouses
- Rights of divorced parties
- Deeds by persons falsely representing their marital status
- Improperly recorded legal documents
- Defective acknowledgements due to improper or expired notarization
- Improper conveyances by an heir or survivor of a joint estate
- Mistakes and omissions resulting in improper abstracting
- Errors in tax records