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Title Insurance
What is Title Insurance? FAQs
What is Title Insurance?
The purchase of a home is often the single largest investment people will make in a lifetime; therefore, the importance of protecting such an investment cannot be over stressed. Title insurance is protection which assures the rights and interests to the property are as described in the title record, the transfer of ownership is properly completed and the new owner receives protection from claims against the property. It is the most effective, most accepted and least expensive way to protect property ownership rights.
Why Do You Need a Title Insurance Policy?
If title insurance companies work to eliminate risks and prevent losses caused by defects in the title before the closing, why do you need a title insurance policy? The title to the property could be seriously threatened or lost completely by haz- ards which are considered hidden risks. Matters such as forgery, incompetency or incapacity of the parties, fraudulent impersonation, and unknown errors in the records are examples of “hidden risks” which are not discoverable by a search of the public records but could provide a basis for a claim after the property has been purchased.
Why Does the Lender Need a Policy on My Property?
For the lender, a title policy insures they haves a valid lien in the form of a deed of trust secured by the property and no one else other than those listed on the policy has a prior claim such as another loan secured by the property. The title policy remains in effect as long as the lender’s lien remains on the property.
The existence of a lender’s title policy encourages banks, savings and loan associ- ations, commercial banks, life insurance companies, etc., to approve a loan where their lien will be secured against the property being used as the collateral for the loan. The title company insures that the title to the property is marketable in the event of foreclosure which is backed by the integrity and solvency of the title insurance company.
