What is
Title Insurance?
Title insurance is a
contract to protect an owner against losses arising through
defects in the title to the real estate owned. If the title is
insurable, the company guarantees the owner against any loss due
to defects in title or expense in legal defense of the title up to
the amount or liability of the actual insurance policy. Usually
the amount of that policy is the purchase price.
Why Buy Title
Insurance?
When a person buys a car or consumer goods, they seldom need to
know whether the former owner is married, single or divorced;
whether they have paid their taxes or are involved in a lawsuit.
But when a person buys a home, it is necessary to have all that
information and much more. While he may own the property, others
may also have rights in that same real estate.
A competent investigation can uncover such items as unpaid taxes,
easements, restrictions and more. However, all items affecting the
title are not contained in a single book, in a single office or
even in the same city. Then, add to this the possibility of human
error at a multiplicity of points. Yet, what is not in the public
records often causes title problems. For all these reasons and
many more, a property owner needs the protection afforded by title
insurance.
What Can Make
Title Defective?
There are many possible causes of title defects that no
examination can disclose. That is because they have never been
recorded and thus do not appear in the records. A title insurance
policy protects the owner against all these hidden risks; those
listed below and many more:
-
FRAUD
False claims of ownership, forged deeds, wills, signatures,
conveyances, instruments, false representations, false records
of all sorts, illegal acts of the trustees, guardians,
conservators and attorneys.
-
IMPROPER
DEEDS AND WILLS
Deeds by persons of unsound mind, minors; deeds delivered
after death or without the grantor's consent; invalid,
suppressed erroneous wills, missing heirs, unsettled estates.
-
HUMAN
ERROR
Errors in copying, indexing, recording; errors by
administrators, executors, trustees, guardians and attorneys;
destruction of records.
-
LIENS AND
OTHER RIGHTS
Liens for unpaid state, inheritance, income, property and gift
taxes; homestead rights, community property rights; irregular
court proceedings, court opinion reversals, lack of court
jurisdiction. defective foreclosures.
The time to
purchase a title policy is when the earnest money contract is
signed. That way an owner is protected from the very beginning.
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