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A title is the foundation
of property ownership. It is the owner's right to possess
and use the property.
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Title insurance is your
policy of protection against "hidden hazards" - resulting in
a claim against your ownership.
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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.
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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.
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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.
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Yes. There are some
"hidden hazards" 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
hazards" 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.
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That depends on the
claim. In an extreme case, you could lose your entire home
and property, and still be liable to pay off the balance of
your mortgage. Most claims aren't that dramatic, but even
the smallest claim can cost you time, money and aggravation,
and you may have to pay costs for a legal defense.
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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.
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Not necessarily. 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.
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Because the owner could,
in a very short time, do many things to encumber the title.
For example, he could grant easements or construct
improvements that encroach on adjacent property. It is
necessary to conduct an up-to-date title search to uncover
any such problems.
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A title policy insuring
the builder does not protect you. Also, a great many things
could have happened to the land since the builder's policy
was issued. Liens, judgments and unpaid taxes for which
prior owners were responsible may be disclosed after you
purchase the property, causing you aggravation and costing
you money.
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The seller provides an
owner's title insurance policy, which is evidence to the
buyer that there is a marketable title to the subject
property. If there are problems with the title, a title
search reveals them and permits resolution of the problem
prior to closing. The buyer provides the title insurance
loan policy, which protects the lender's security interest
in the property and assures the lender of first lien
position.
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| For as long as you
or your heirs retain an interest in the property and, in
some cases, even beyond.
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