|
About Title Insurance
|
|
|
|
|
Title insurance is simply a contract between the insured and the title company.
The insured agrees to pay a premium for the title policy. Should the title to
the property or mortgage insured be questioned, the title company agrees to
defend the title in court or to make good any loss suffered because of the
title being defective. The amount of coverage is up to the face value of the
policy, according to the terms of the policy. The issuance of title insurance
is not merely guess work, nor is it a wager. It is based upon careful
examination of the official records of property titles, and the judgmental
decisions made by skilled title examiners.
|
|
|
|
|
No, there are two main types of title policies. (1) Owner title policy, which
insure against loss to the owner of the property and (2) mortgage title
policies, which insure the holder of a mortgage that his mortgage is a lien
(claim) on the property. Other types of policies are leasehold and easement
policies.
|
|
|
|
|
An owner policy protects the insured owner while he owns the property. It also
protects the insured after he sells the property, from any loss he may suffer
due to the warranty of title contained in the deed which he signs when his sale
is made. The premium is paid only once for this protection. The policy
guarantees that at the date the deed was filed on record putting title in the
insured, the title was free of defects, except those shown in the policy. It
guarantees up to the face value of the property. The policy does not guarantee
the actual amount of land, nor does it guarantee that there are no buildings on
the property belonging to someone else, unless a survey is furnished to the
title company by an acceptable surveyor, an additional premium is paid and the
policy so states.
|
|
|
|
|
People who lend money. A mortgage title policy guarantees to the insured (the
lender) that he has a valid lien on the property. The amount of coverage
decreases as the note is paid off. It does not guarantee anything to the
property owner and provides him no recourse to the title company should the
title prove defective. If the mortgage policy holder should foreclose, then the
policy would become an owner title policy to him.
|
|
|
|
No, title insurance is unique in that liability under it ends where liability
under other forms of insurance begins. Title insurance insures against the
results, acts and defects of the past, whereas other types of insurance protect
against happenings or losses in the future. For instance:
-
A title insurance policy issued today insured the holder against defects of the
past, occurring prior to the date of the issuance, that may affect the title.
The title policy does not insure against defects originating at a later date.
-
Fire insurance, life insurance, accident insurance, etc., protect against
happenings in the future.
|
|
|
|
|
Before issuing a title policy, a careful search is made of the county, state
and federal records that affect real estate. This is accomplished by using the
company abstract plant which maintains references to every deed, mortgage,
death, divorce, etc. which might affect property. These instruments are
examined by attorneys employed by the title company. Based upon the results of
examination, the title company decides whether to issue a policy.
|
|
|
|
|
No, title insurance is not intended for titles known to be bad or defective. A
title company would not write a title policy when there is a known serious
defect, any more than a life insurance company would write a life insurance
policy for an applicant whom a doctor reports to be seriously ill.
|
|
|
|
|
Depending upon the severity of title defects, they can usually be corrected
with the assistance of any attorney of the seller's choice. Many times this is
done by affidavits, correction deeds and other instruments. In some cases court
action may be necessary. Before a title company will issue a policy, the title
to the property must be perfected to that company's satisfaction. The title
company does not cure bad titles or write legal papers.
|
|
|
|
