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Frequently Asked Questions

Real Estate Title insurance FAQ's

What is Escrow?

Escrow is the procedure where a disinterested third party handles legal documents and funds on behalf of a buyer or seller.

What does title insurance cover?

Real estate title insurance covers the insured against a loss or claim caused by a title defect.

Why Purchase An Owner's title Insurance Policy?

Lender's Coverage Is Not Enough.

Lender's title insurance, generally purchased in any transaction involving a lender, does not protect you, the buyer. It simply protects the lender. It is for this reason that many homeowners choose to purchase an Owner's Policy of Title Insurance. This protects you from several issues up until the time at which you sell your property.

What Is Owner's Title Insurance?

Owner's title insurance usually guarantees that the Insurer will pay any legal fees for defending against challenges to title and will pay any valid claims. Even though a title company has performed a title examination and assumed liability for the work, an Owner's Policy of Title Insurance would be a good idea. A title agent's errors and omissions covers the Insured for any negligence committed by an examiner.

How Does Owner's Title Insurance Protect Me?

Owner's title insurance is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee and lasts as long as you or your heirs have an interest in the property. This may even be after the Insured has sold the property. Only Owner's title insurance fully protects the buyer should a problem arise with the title that was not uncovered during the title search. Owner's title insurance also pays for any legal fees involved in defending a claim to your title.

Why Title Issues May Arise

During a title exam, title agents complete a search of the public records for items that may affect the title to your property. These searches generally go back about 42 years and may uncover defects in the title such as improper information made in wills, deeds, trusts, outstanding judgments or tax liens against the property, and easements of record.

Occasionally, in spite of an exhaustive title search, hidden hazards can emerge after closing. In fact, statistics show that a title issue can arise in as many as 1in 4 transactions. Things such as mistakes in the public record, previously undisclosed heirs claiming to own the property, or forged deeds could create a cloud on the title. Owner's title insurance offers financial protection against these issues by insuring that the Insurer will negotiate with third parties to resolve the issue, or pay damages and legal fees involved in defending your title to the property.

Title Encumbrances and defects and how they affect title.

Encumbrance- A lien, liability or charge upon a parcel of land.
The following are a list of common encumbrances on real estate which affect the property but usually not the marketability. In most cases these are permanent and run with the property. In some cases they will expire or run out with time on their own. Others can be released or renegotiated by the parties.
Access/ Ingress- The right to enter and leave a tract of land from a public way.
Conditions and Restrictions- A common term used to designate the uses to which land may not be put and providing penalties for failure to comply. "Commonly used by land subdividers on newly platted areas.
Covenant- An agreement written into deeds and other instruments promising performance or non-performance of certain acts, or stipulating certain uses or non-uses of property.
Dedication- The offering of lands to the public, usually for street purposes.
Easement- A right running with the land to use other lands for a specific purpose.
Egress- The right to leave a tract of land. "often interchangeably with access".
Improvements- Those additions to raw lands tending to increase value, such as buildings, streets, sewers, etc.
Lease- A grant of the use of lands for a period of time in consideration of the payment of rental.
Restrictive Covenants- Building and use restrictions usually specifying the type and use of improvements enforceable by injunction.
Right of Way- The right which one has to pass across the lands of another. (see easement).
Setback Lines- Those lines which delineate the required distances for the location of structure in relation to the perimeter of the property.
Survey- The process of measuring land to determine its size, location and physical description.
Zoning- The right of a municipality to regulate and determine the compatible character and use of property.
The following are a list of common encumbrances on real estate which affect the property and usually the marketability.
Adverse Possession- The doctrine by which one may become the owner of land by occupying them for more than 21 years.
Bankrupt- A person who, through a court proceeding, is relieved of all his debts, after surrender of all his assets to a court appointed trustee.
Condemnation-Taking private property for public use through court proceedings.
Dower- The inchoate right to life estate in the lands of ones spouse, which vests (if not released) at the death of such spouse.
Eminent Domain- The power to take or condemn private property for public use.
Equitable Title- A right or interest in land which is not a legal estate but is recognized by a court of equity.
Foreclosure- The court action by which an interest in land is extinguished in favor of another interest.
Judgment- A decree of court.
Judgment Lien- The charge upon the lands of a debtor resulting from the decree of a court properly entered in the judgment docket.
Land Contract/ Land Installment Contract- An agreement providing for the installment sale of realty with title to pass when payment is complete.
Lien- A hold or claim against property as security for home debt or charge.
Life Estate- A grant of reservation of the right of use, occupancy and ownership of for the life of an individual.
Mortgage- An instrument used to encumber land as security for a debt.
Option- A contract under which one is given the privilege of buying property at a stipulated price at any time during a stipulated period.
Reverter (Reversion)- An interest in land which may vest when a limited grant terminates.

Title Insurance Glossary

Chain of Title - The successive ownerships' or transfers in the history of the title to a tract of land.
Closing (also called a "settlement") - A meeting of all parties involved in a property transaction during which pertinent documents are signed and transferred, and funds are distributed.
Commitment - A commitment on the part of the insurer, once a title search has been conducted, to provide the proposed insurer with a title insurance policy after execution and recording of specified documents.
Deed - An official document through which property ownership is transferred from one party to another.
Easement - An interest in land owned by another. An easement entitles its holder to a specific, limited use such as laying a sewer or maintaining utility lines.
Encroachment - Any building improvements or structure (such as a wall, fence or driveway) which illegally intrudes on the property of another.
Encumbrance - A claim, lien or liability held by a third party and attached to a parcel of land, which lessens the value of the title in that property.
Fee Simple Estate - An estate in which the owners are entitled to the entire property, with unconditioned power of disposition during their lives.
General Warranty Deed - A deed which conveys not only all the grantor's interests in and title to the property to the grantee, but also warrants that if the title is defective or has a "cloud" on it (such as mortgage claims, tax liens, title claims, judgments, or mechanics liens against it) the grantee may hold the grantor liable.
Judgment - The financial determination of a court regarding the rights of parties in action. A judgment of debt upon a property owner can create a lien upon all of that owner's land within a certain jurisdiction.
Lien - A claim or charge filed upon the property of another for payment of a debt, obligation or duty.
Limited Warranty Deed - The grantor does not warrant against title defects arising from conditions that existed before he/she owned the property.
Quit Claim Deed - A deed which transfer whatever the grantor of the deed may have in the particular parcel of land. A quit claim deed is often given to clear the title when the grantor's interest in a property is questionable. By accepting such a deed the buyer assumes all the risks. Such a deed makes no warranties as to the title, but simply transfers to the buyer whatever interest the grantor has.
Title Search - An examination of public records, laws and court actions to make sure that the seller is the legal owner and to disclose all other claims or encumbrances on the property affecting its ownership.
Title Survey - A drawing or map showing the precise legal boundaries of a property, the location of improvements, easements, rights of way, encroachments, and other physical features.
Recording - The noting in public office of a properly executed legal document, such as a deed or mortgage.