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Title Insurance

Just what is Title Insurance? Title insurance protects home buyers and lenders against losses due to previously unreported title defects such as forgeries, fraud, recording errors, improperly executed documents, undisclosed restrictive covenants, claims by missing heirs and a host of other types of title defects. Title insurance guarantees that you own the property, which you are purchasing.

Protecting the interests of lenders and home buyers is done in two parts. Lender's Policies protect the lender's interest in a property, while an Owner's Policy is designed to protect the home owner.

Title Insurance provides the following:

- Protection against title defects

Title insurance will provide compensation up to the amount of the policy if:

• A claim against the title to the real property results in the loss of title to the property

• A claim against the title to the real property results in expenses to clear up title defects uncovered by such claims.

- Legal defense

Title insurance will work with the policyholder to provide legal defense against claims against the title to the real property.

- Up-to-date information

Title insurance requires that a title search of the public records is conducted prior to issuing a title insurance policy. This title search reveals the rights a buyer has with regard to development or improvements of the property. The development or improvements include, but are not limited to building set back areas, rights of way, and easements. The title search also reveals restrictions that may have been placed on the use of the property by previous owners or homeowner's associations.

- One-time premium payment

Title insurance only requires a one-time payment, usually at closing. Title insurance will protect the homeowner against loss resulting from any title defects covered in the policy for as long as the real property is owned.

What are the principal forms of title insurance?

There are two principal forms of title insurance:

• The owner's policy, which protects the homeowner against loss from defects in the title.

• The lender's policy, which insures that the lender has a valid lien on the property and indemnifies the lender against losses resulting from title defect.

What is the difference between property/casualty insurance and title insurance?

Property/casualty insurance protects the homeowner against events that might adversely affect the value of his or her property, such as fires and floods. It is written for a fixed term for which the company receives a set premium. At the end of this term, premiums may increase or decrease.

A title insurance policy can be perpetual as to the term. There is only one initial premium charged for the risks that are assumed for as long as the homeowner continues to own the real property. In essence, this policy remains in effect as long as the homeowner continues to own the home.