What is Title?
Title is ownership rights to a homebuyer’s property
What is title insurance?
Title insurance is a policy that protects the homebuyer’s investment and property rights, and legal claims to the property. It provides coverage for future claims or future losses due to title defects which are created by some past event. There are two different types of title insurance:
- Owner’s policy is purchased by the homebuyer and is the best way to protect and cover the property rights for the homebuyer, as well as the trustees, inheritors, and beneficiaries as long as they own the home.
- Lender’s policy is usually required by the lender and protects only the lender’s financial interest. It is usually paid for by the homebuyer.
Why buy title insurance?
Buying a home is the largest investment one will make. Owner’s title insurance guarantees protection of the property from legal claims.
How does title insurance protect a new homebuyer?
For example, if a new home was purchased from a builder, but the builder has not paid the roofer, the roofer may file a lien against the property. Without owner’s title insurance, the homebuyer would be responsible for paying the debt.
What does owner’s title insurance cover?
The owner’s title insurance policy protects against any unforeseeable errors or “hidden risks” not shown by the public records and are not discovered by a search and examination. Matters such as forgery, incompetency or incapacity of the parties, fraudulent impersonation, undisclosed missing heirs, and unknown errors in the records are examples of "hidden risks" which could provide a basis for a claim after the property was purchased.
What is a title search?
A title search is an early step in the home-buying process to uncover issues that could limit the homebuyer’s rights to the property. As part of the process, Entitle conducts a diligent search of the public records for those documents associated with the property.
What is the value of the title insurance and how long does it last?
Unlike other forms of insurance, the original premium is the only cost as long as the homebuyer or their heirs own the property. There are no annual payments. For a low one-time fee, homebuyer’s can be rest assured, knowing they are protected against existing debts or claims to the property
How does a title insurance policy protect an insured owner?
In the event of a covered matter affecting the title, the insurance policy may protect the homebuyer in various ways including: (1) Defending the title, (2) Bearing the cost of settling the covered matter, or (3) Paying the homebuyer for the loss due to the covered matter.
What the Realtor should know about title insurance:
Make sure all their clients are protected. Home buying can be an overwhelming experience with lots of paperwork that needs to be signed and fees to be paid. Owner’s title insurance is one of those misunderstand items by homebuyers at closing. As the main point working with their clients, the realtor is in a position to help them understand the value of owner’s title insurance and the negative implications if not purchased.