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What is a title?
A title is the foundation of property ownership. It is the owner's right to possess and use the property.
Why is transferring the title to real estate different from transferring the title to other items, such as a car?
Because land is permanent and can have many owners over the years, various rights in land (such as mineral, air or utility rights) may have been acquired by others by the time you come into possession of it, even if the land has never before been built upon. So in order to transfer a clear title to a piece of land, it is first necessary to determine whether any rights are outstanding.
What is a title search?
A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. The purpose of the search is to verify the seller's right to transfer ownership, and to discover any claims, defects and other rights or burdens on the property.
What kinds of problems can a title search reveal?
A title search can show a number of title defects and liens, as well as other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land.
Are there any problems that a title search cannot reveal?
Yes. There are some “hidden” defects that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his or her marital status, resulting in a possible claim by a legal spouse. Other hidden defects include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you've purchased your home and can jeopardize your right to ownership.
What is title insurance?
Title insurance is your policy of protection against loss if any of these problems – even those not revealed by a diligent title search - results in a claim against your ownership.
How does title insurance protect my investment if a claim should arise?
If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense - and pay all court costs and related fees. Also, if the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.
The owner of the property has a deed. Isn't that proof of ownership?
A deed is just a document by which the right of ownership in land is transferred, whatever that right may be. It's not proof of ownership, and it doesn't do away with rights others may have in the property. In addition, a deed won't show you liens or claims that may be outstanding against the title.
Are there different types of title insurance policies?
Yes. Basically there are two different types of policies - a loan policy and an owner's policy. The loan policy protects the lender's interest in the property as security for the outstanding balance under the buyer's investment or equity in the property up to the face amount of the policy. (Title insurers in many states offer increased policy coverage through inflation endorsements to cover increases in value due to inflation.)
How much does title insurance cost?
Probably a lot less than you think. Charges vary in different sections of the country, but generally the cost of title insurance to about one percent or less of the cost of the property. And unlike other insurance premiums, which must be paid annually, a title insurance premium is paid one time only, usually at settlement, making it one of the most cost effective insurance investments one can obtain.
How long does my coverage last?
For as long as you or your heirs retain an interest in the property and, in some cases, even beyond.
Where can I get title insurance?
Any real estate attorney or licensed title insurance company operating in your state can issue title insurance as an agent for one or move title insurance underwriters. When choosing a title insurance agent (real estate attorney or licensed title insurance company), it is important that you look for expertise and experience, as well as the financial strength of the title insurance underwriter to protect you should a claim arise. Woods, Weidenmiller, Michetti & Rudnick, LLP is an approved agent for Old Republic National Title Insurance Company and Attorneys' Title Insurance Fund, Inc..
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