Frequently asked questions about title insurance
Title insurance is necessary for every homebuyer, but do you understand why? Even seasoned buyers don’t always know the ins and outs of the title business. These questions cover the basics.
What do title companies do?
AAfter your initial application, your title company takes care of many documents before closing. Our staff of dedicated professionals will take the time to guide you through the process to protect against adverse title claims long after your closing. Here’s what you can expect us to deliver along the way.
Prior to closing
- Conduct title search
- Coordinate with appropriate parties
- Prepare all necessary documents
- Schedule closing
- Account for all funds
- Review closing documents
- Disburse all mortgage loan or sale proceeds
- Satisfy all lender requirements
- Record transfer documents
- Issue title insurance policy
Why do you need title insurance?
AOwning real estate is one of the most precious freedoms in this country. You want the assurance that the property you are buying will be yours. Other than your mortgage holder, no one else should have any claims or restrictions against your home.
No matter how experienced and thorough your title examiner may be, a title search cannot absolutely assure that no title faults are present. Title searches are based on a careful examination of public records, which may not—and in some cases, cannot—disclose certain types of information that may later affect your title.
While other kinds of insurance, such as auto, life or health, cover you against future losses, title insurance protects against risks caused by title faults that occurred before you owned the property. Once you pay the one-time premium, your policy remains in effect until the property is sold to a new buyer, even if that doesn't occur for decades.
What is a lender's policy?
AA lender's policy, also known as a loan policy or a mortgage policy, protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of the sale.
This policy only protects the lender's interest. It does not protect the purchaser. That is why a real estate purchaser needs an owner's policy.
What is an owner's policy?
AAn owner's policy protects you, the purchaser, against a loss that may occur from a fault in the ownership or interest you have in the property. You should protect the equity in your new home with a title policy.
What does an owner's policy provide?
- Protection from financial loss due to demands that may be charged against the title to your home, up to the amount of the title policy.
- Payment of legal costs if the title insurer has to defend your title against a covered claim.
- Payment of successful claims against the title to your home covered by the policy, up to the amount of the policy.
Why does the seller need to provide title insurance?
AThe purchaser will need evidence that their investment in your property is free of title defects. The title insurance policy that you provide the purchaser is a guarantee that you are selling a clear title to your real estate, unencumbered by any legal attachments that might limit or jeopardize ownership. It will reassure your purchaser that he or she is protected from any title risks or losses and could help you close your deal.
Why does the buyer need title insurance?
AWithout title insurance, you may not be fully protected against errors in public records, hidden defects not disclosed by the public records, or mistakes in examination of the title. As a result, you may be held fully accountable for any prior liens, judgments or claims brought against your new property. If this should occur, your title policy insures that you will be defended at no cost against all covered claims up to the amount of the policy.
How much does title insurance cost?
AThe insurance commission approves and controls the premiums for title insurance policies. The premiums are paid only once and the cost depends upon the purchase price of the property. The policy amount must be equal to the purchase price. Call 303-426-0990 for details.