Title Insurance and Overview
An Overview of Title Insurance
What is a title?
Simply, title is a person’s right to ownership and possession of property. In real estate, rights of title are conveyed within a written formal document called a deed. Title may be acquired through purchase, inheritance, gift, or through foreclosure.
How do real estate titles differ from other types of titles, such as car titles?
In real estate, the deed is the legal document which evidences one’s right of title and conveys ownership. The ownership of personal property (such as an automobile or a boat) is evidenced by a certificate of title.
Because real estate is permanent, each property may have its own varieties of use restrictions according to its history, location and zoning. It also may have had many owners over the years each with different claims to ownership and usage.
Real estate deeds convey title, state tenancy, and reveal the rights of usage and/or restrictions transferred with the property.
What is title insurance?
Title insurance is an insurance policy protecting the homeowner or the lender against possible financial loss resulting from legal defects from previous title conveyances. Title insurance protects against any hidden hazards that may emerge after closing, such as errors in recording, undisclosed liens, legal encumbrances, forgery, or previously undiscovered heirs. The cost of the policy is determined by the value of the property, and is a one-time fee due at the time of closing. Title insurance also covers the cost of defending the title in court, if necessary.
What is a title search?
A title search is a detailed examination of municipal records (deeds, tax records, judgments, mortgages, liens) to provide information useful in determining the legal ownership of real estate. A title search can reveal any restrictions or encumbrances affecting the transfer or financing of a property. Through title search and examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful preventative work cannot locate all hidden title hazards.
What does title insurance do?
Owner’s Title policy insurance protects you in the event that a claim is made against your property. It insures you against title error or claims disputing the true ownership of your property. Title insurance, in accordance with the issued policy, will assure your legal defense, including paying court costs and related fees. If the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy. Your premium is paid only once, at the time of closing, and remains in effect as long as you, or your heirs, retain an interest in the property.
A second type of title insurance, a Lender’s Policy, serves as the bank’s protection. By insuring the amount of the mortgage loan, the lender’s policy protects the lender’s investment.
What should I bring to closing?
All parties involved in the sales transaction must bring valid photo identification, such as a driver’s license or a valid passport. Remember that all funds to be exchanged at the closing table must be certified in the form of a cashier’s check made payable to yourselves (to be endorsed at closing) or to American Title.