Frequently Asked Questions
Real Estate Title insurance FAQ's
Escrow is the procedure where a disinterested third party handles legal documents and funds on behalf of a buyer or seller.
Real estate title insurance covers the insured against a loss or claim caused by a title defect.
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.
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.
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.
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.