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Questions &
Answers |
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Why Do You Need
Title Insurance? |
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To protect possibly the most
important investment you'll ever make — the investment in your home. |
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A lender goes to great lengths to
minimize the risk of lending you the money you need to buy a home.
First, your credit is checked as an indication of your ability to
pay back your loan. |
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Then, your lender goes a step further.
He or she makes sure that the quality of the tile to the property
you are about to buy and which you will pledge as security for the
loan is satisfactory. The lender does this by obtaining a loan
policy of title insurance. |
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The Loan Policy Doesn't Protect You |
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The loan 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 not be
knowable at the time of sale. |
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But this policy only protects the
lender's interest. It does not protect you. That's why you need an
owner's policy, which can be issued at the same time as the loan
policy for a nominal one-time fee. |
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What Danger of Loss Can You Face? |
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If a lender has title insurance
protection and you don't, what possible danger of loss can you face? |
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As an example, let's say you've bought
a home for $100,000. You've made a $20,000 down payment, and your
lender holds an $80,000 mortgage lien or beneficial interest. Your
lender has title insurance coverage protecting his interest up to
$80,000. But your $20,000 is not covered. |
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What if some matter arises affecting
the past ownership of the property? The title insurance company
would only defend and protect the interest of the lender. You would
have to assume the financial burden of your own legal defense. If
your defense is not successful, the result could be a total loss of
title. |
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The title insurance company pays the
lender's loss and is entitled to take an assignment of your debt.
You are out your down payment, other equity in the property which
you have accumulated, and your home. And you still owe the
remaining balance on your note. |
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How Can There Be a Title Defect If
the Title Has Been Searched And a Loan Policy Issued? |
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Title insurance is issued after a
careful examination of copies of the public records. But even the
most thorough search cannot absolutely assure that not title hazards
are present, despite the knowledge and experience of professional
title examiners. In addition to matters shown by public records,
other title problems may exist that cannot be disclosed in a search. |
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What Title Insurance Protects
Against |
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Here are just a few of the most common
hidden risks that can cause a loss of title or create an encumbrance
on title: |
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• False
impersonation of the true owner of the property. |
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• Forged
deeds, releases, or wills. |
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Undisclosed or missing heirs. |
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Instruments executed under invalid or expired power of attorney. |
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Mistakes in recording legal documents. |
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Misinterpretations of wills. |
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• Deeds
by persons of unsound mind. |
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• Deeds
by minors. |
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• Deeds
by persons supposedly single, but in fact married. |
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• Liens
of unpaid estate, inheritance, income or gift taxes. |
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• Fraud. |
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What Protection Does Title
Insurance Provide Against Hidden Risks? |
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Title insurance will pay for defending
against any lawsuit attacking your title as insured, and will either
clear up title problems or pay the insured's losses. For a one-time
premium, an owner's title insurance policy remains in effect as long
as you, or your heirs, retain an interest in the property, or have
any obligation under a warranty in any conveyance of it. Owner's
residential title insurance, issued simultaneously with a loan
policy, is the best title insurance value you can get. |
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By combining expertise in risk
elimination at the time of issuing a policy, and protection against
hidden risks as long as the policy remains in effect, your title
insurer protects against title loss. |
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What This Means to You |
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The peace of mind in knowing that the
investment you've made in your home is a safe one. |
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©
1993 TICOR Title, Reprinted with Permission from the TICOR Title
Insurance Company. |
