you've ever purchased a home before, you may already
be familiar with the benefits and terms of title insurance.
But if this is your first home loan or you are refinancing,
you may be wondering why you need another insurance
The answer is simple: The purchase of a home is most
likely one of the most expensive and important purchases
you will ever make. You, and especially your mortgage
lender, want to make sure the property is indeed yours:
That no individual or government entity has any right,
lien, claim, or encumbrance on your property.
The function of a title insurance company is to make
sure your rights and interests to the property are clear,
that transfer of title takes place efficiently and correctly,
and that your interests as a homebuyer are fully protected.
Title insurance companies provide services to buyers,
sellers, real estate developers, builders, mortgage
lenders, and others who have an interest in real estate
transfer. Title companies typically issue two types
of title policies:
1) Owner's Policy. This policy covers you, the homebuyer.
2) Lender's Policy. This policy covers the lending institution
over the life of the loan.
Both types of policies are issued at the time of closing
for a one-time premium, if the loan is a purchase. If
you are refinancing your home, you probably already
have an owner's policy that was issued when you purchased
the property, so we'll only require that a lender's
policy be issued.
Before issuing a policy, the title company performs
an in-depth search of the public records to determine
if anyone other than you has an interest in the property.
The search may be performed by title company personnel
using either public records or, more likely, the information
contained in the company's own title plant.
After a thorough examination of the records, any title
problems are usually found and can be cleared up prior
to your purchase of the property. Once a title policy
is issued, if any claim covered under your policy is
ever filed against your property, the title company
will pay the legal fees involved in the defense of your
rights. They are also responsible to cover losses arising
from a valid claim. This protection remains in effect
as long as you or your heirs own the property.
The fact that title companies try to eliminate risks
before they develop makes title insurance significantly
different from other types of insurance. Most forms
of insurance assume risks by providing financial protection
through a pooling of risks for losses arising from an
unforeseen future event, say a fire, accident or theft.
On the other hand, the purpose of title insurance is
to eliminate risks and prevent losses caused by defects
in title that may have happened in the past.
This risk elimination has benefits to both the homebuyer
and the title company. It minimizes the chances that
adverse claims might be raised, thereby reducing the
number of claims that have to be defended or satisfied.
This keeps costs down for the title company and the
premiums low for the homebuyer.
Buying a home is a big step emotionally and financially.
With title insurance you are assured that any valid
claim against your property will be borne by the title
company, and that the odds of a claim being filed are