Frequently Asked Questions
Frequently Asked Questions about Title Work & Title Insurance.
What Is Title Insurance or Title Work?
Title insurance, sometimes called title work, is a type of insurance which protects owners of real estate against losses arising from problems connected with their ownership claim or title to their property. Before you buy property, protect your investment with title work, title insurance.
Do I have to Purchasing Title Insurance?
When you purchase property with a mortgage your lender will require title insurance to protect them. Their coverage will last until the mortgage is paid. As a general rule it is foolish not to purchase title insurance. Relative to the cost of property, the cost of title insurance is not significant.
How Does Title Work/Title Insurance Help Us?
First title insurance protects you from defects in the title which, if you lost your property in a title dispute the lender still would have to be paid off. Title insurance would do that. Second, an Owner’s Title Insurance policy protects you for the full value of the property if an issue arises.
What Is Mortgage Title Insurance?
Mortgage Title Insurance is the title work or title insurance policy which the purchaser or person remortgaging property buys to protect the lender or bank.
What Is Mortgage Title Insurance?
It is the title insurance policy you as the owner buy or the seller will buy for you. It protects your interest in the property. At a typically real estate closing when a mortgage is involved there are two title insurance policies purchased. One is a Mortgage Title Policy and the other is an Owners Title Policy. That and other documents are what are commonly referred to as title work.
What Type of Issues Could Cause a Need for Title Insurance?
If a challenge to your ownership title arises, such as a lien, property line dispute, or a deed issue, the title insurance which you receive with your title work will protect you financially. Over the years property ownership can change several times. As the chain of ownership grows there could be unknown “title defects”. Examples are an unrecorded deed which suddenly appears a forged signature, unpaid taxes or other types of liens or clouds to the title. Title insurance covers the insured party for any claims and legal fees that arise out of such problems which occurred prior to their ownership of the property.
How Often Do You Pay The Premium For Title Insurance?
When you acquire real property, the title work includes title insurance which is paid for one time at the closing on the property. The insurance cover lasts as long as you own the property.
When I Buy A Home, Who Pays For The Policy?
In several parts of the country a seller of the property pays for the insurance for the new owner. That is a way of insuring they are conveying good title. When the purchase involves a mortgage, the buyer pays for the title insurance.
Doesn’t the Mortgage Title Insurance Policy Protect Me?
The title insurance protects the lender not you. It protects them against a lost due to a poor title. If you have a significant amount of equity in your property you need a title insurance policy to protect your equity. As time goes by and the mortgage is paid down you are still covered to the full extent of the original cost of your property.
What Period Of Time Does Title Insurance Cover?
This is a good question. The title insurance protects you from claims against your title which arose or occurred any time BEFORE closed on the property. The coverage LASTS until you sell or transfer the property.
How is Title Insurance Different From Other Insurance?
The biggest difference is that it covers something that happened in the past. Most insurance, like fire or auto insurance is bought now to cover something that could happen in the future.
How Long Does Title Insurance Last?
Most title insurance policies title insurance only protects against losses from claims that arose prior to the date of the policy. Coverage ends on the day the policy is issued and extends backward in time for an indefinite period. This is in marked contrast to property or life insurance, which protect against losses resulting from events that occur after the policy is issued, for a specified period into the future.
Long does Title Insurance Coverage Last?
The Owners Policy lasts for as long as the owner or heirs own the property. The Mortgage Policy lasts until the mortgage is paid off.
Does Title Insurance Protect Against All Claims?
One very notable exception to a title insurance, standard policy is that it will not protect against false claims.
Will My Title Insurance Coverage Amount Increase As The Value Of My Property Increases?
It does not. However, there are policy riders which you can add to your policy with will provide for some increase in coverage for value increases
What Happens With Title Work and Title Insurance When I Refinance My Property?
You will have to purchase a new Mortgage or Lenders Title Insurance Policy. Additionally, the title work will include a new title search. The lender will want to know that there are no claims, liens or unpaid takes attached to the property since you purchased it.
Title Insurance Companies Often Have To Pay Claims. Is Title Insurance Overpriced?
Actually it is not overpriced for the protection it provides. Relative to the protection and piece of mind it provides most people see it as inexpensive.
Does Title Insurance Mean I Will Always Be Able To Sell My Property If An Unforeseen Claim Arises?
Auto insurance does not mean you will not have and accident and title insurance does not prevent loss of marketability. If a claim arises you may have a period of time where the title is clouded and you may not be able to sell until your claim is settled. Interest of the owner and the insurer may clash in such cases.
Does the Cost of Title Insurance Vary Across The Country?
Yes, it does vary. In some areas, the premium covers not only protection against loss but also the costs of search and examination, as well as closing services. In other areas, the premium covers protection only, and borrowers pay for the other related services separately. In other states the charges for title-related title work services are paid to title insurance companies. And in other states, borrowers may pay attorneys or independent companies called abstractors or escrow companies to do some of the title work.
Should I Shop Around For Title Insurance?
That is a difficult question. Some states regulate title insurance policy costs. Others states: Alabama, District of Columbia, Georgia, Hawaii, Illinois, Indiana, Massachusetts, Oklahoma, and West Virginia do not regulate rates.
In Texas and New Mexico rates are established by the state for title insurance. So it is best to seek out a competent person who has experience with title insurance companies and ask for a recommendation.
What Are Examples of “Title Defects” Which Title Insurance Covers?
Depending on the policy you have, here are some common title defects or issues for which title insurance offers protection to you:
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- Forged deeds, mortgages, releases of mortgages and other instruments
- False impersonation of the true owner of the land or of his consort.
- Instruments executed under fabricated or expired power of attorney (death).
- Deeds apparently valid but actually delivered after death of grantor or grantee, or without consent of grantor.
- Deeds by persons of unsound mind.
- Deeds by minors.
- Deeds not properly delivered.
- Deeds which appear to convey title but are really mortgages.
- Outstanding prescriptive rights not of record and not disclosed by survey.
- Legal descriptions which are adequate.
- Duress in execution of instruments.
- Defective acknowledgment due to lack of authority of notary. (Acknowledgment taken before commission or after expiration of commission.)
- Deed or property recited to be separate property of grantor which is in fact community or joint property.
- Deed from bigamous coupe. (Prior existing marriage in another jurisdiction.)
- Undisclosed divorce of spouse who conveys as sole heir of deceased consort.
- Undisclosed heirs.
- Misinterpretation of wills, deeds and other instruments.
- Birth or adoption of children after date of will.
- Children living at date of will but not mentioned therein.
- Discovery of will of apparent intestate.
- Discovery of later will after probate of first will.
- Administration of estate and probate of wills of persons absent but not deceased.
- Conveyance by heir, devisee or survivor of a joint estate who murdered the decedent.
- Deed from Trustee of purported business trust which is in fact a partnership or joint stock association.
- Deed of executor under non-intervention will when order of solvency has been fraudulently procured or entered.
- Deeds to or from corporations before incorporation or after surrender or forfeiture of charter
- Claims of creditors against property conveyed by heirs/devisees within prescribed period after owner’s death.
- Mistakes in recording legal documents. (For example, incorrect indexing, errors in transcribing and failure to preserve original instrument.)
- Record easement, but erroneous ancient location of pipe or sewer line which does not follow route of granted easements.
- Special assessments where they become liens upon passage of resolution and before recordation or commencement of improvements for which assessed.
- Want of jurisdiction of persons in judicial proceedings.
- Failure to include necessary parties in judicial proceedings.
- Federal estate and gift tax liens.
- State inheritance and gift tax liens.
- Errors in tax records. (For example, listing payment against wrong property.)
- Ineffective waiver of tax liens by tax or other governing authorities repudiated later by successors.
- Corporation franchise taxes as lien on all corporate assets, notice of which does not have to be recorded in the local recording office.
- Erroneous reports furnished by tax officials, but not binding on municipality.
- Tax homestead exemptions set aside as fraudulently claimed.
- Lack of capacity of foreign personal representatives and trustees to act.
- Deeds from nonexistent entities.
- Interests arising by deeds to fictitious characters to conceal illegal activities on the premises.
- Deed in lieu of foreclosure set aside as being given under duress.
- Ultra vires deed given under falsified corporate resolution.
- Conveyances and proceedings affecting right of servicemen protected by the Soldiers and Sailors Civil Relief Act.
- Federal condemnation without filing of notice. (Federal law does not require filing of notice of taking in local recording office.)
- Break in chain of title beyond period of examination or public record where running of adverse possession statute has been suspended. (True owners are incompetent, absent or incarcerated or title is held by the sovereign.
- Deed from record owner of land where he has sold property to another purchaser on unrecorded land contract and the purchaser has taken possession of premises.
- Void conveyances in violations of public policy; (payment of gambling debt, payment for contact to commit crime or conveyance made in restraint of trade.)
- A deed which was recorded incorrectly
- The discovery of a forged deeds
- The appearance of an unknown person making a claim to your property.
• The discovery is an improper legal description on a previous deed. - The discovery of an improper legal description on your deed
• The discover of mismatching legal descriptions on adjoining properties.
• The improper recording of deeds - Building permit violations
• Adverse possession or prescriptive easements
• Building encroachments
• Incorrect surveys
• Pre-existing violations of subdivision, zoning laws, restrictive covenants.
How Much Does Title Insurance Cost?
Today the cost of title insurance, paid at one time is very roughly $3.60 per $1,000 in value or price. So a title insurance policy on a $200,000 house would cost, very roughly, depending on the area of the country about $700 to $800.
The cost is very inexpensive for the piece of mind and protection you receive