Q: What is title insurance?
A: An insurance policy--protecting against loss should the condition of title to land
be other than as insured.
Q: Why do I need title insurance?
A: When you buy a home, or any property for that matter, you expect
to enjoy certain benefits from ownership. For example, you expect to be able to occupy and use the property as you wish, to
be free from debts or obligations not created or agreed to by you, and to be able to freely sell or pledge your property as
security for a loan. Title insurance is designed to cover these rights you bargain for.
Q: What if I have a problem? Do I have to lose my property to make a
claim?
A: Not at all. At the mere hint of a claim adverse
to your title, you should contact your title insurer or the agent who issued your policy. Title insurance includes coverage
for legal expenses which may be necessary to investigate, litigate or settle an adverse claim.
Q: What does Owner's Title Insurance cost?
A: The cost varies, depending mainly on the value of your property. The important thing
to remember is that you only pay once, then the coverage continues in effect for so long as you have an interest in covered
property. If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property,
giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer gives you a mortgage to finance a
purchase of covered property from you, your coverage continues to protect your security interest in the property.
Q: If my lender gets title insurance for its mortgage,
why
do I need a separate policy for myself?
A: The lender's policy covers
only the amount of its loan, which is usually not the full property value. In the event of an adverse claim, the lender would
ordinarily not be concerned unless its loan became non-performing and the claim threatened the lender's ability to foreclose
and recover its principal and interest. And, in the event of a claim there is no provision for payment of legal expenses for
an uninsured party. When a loan policy is being issued, the small additional expense of an owner's policy is a bargain.
Q: Can you be a little more specific about the types of claims,
or
risks, covered by title insurance?
A: Sure. First understand
there are basically two different levels of coverage: Standard coverage and advanced or extended coverage.
Standard coverage handles such risks as:
- Forgery and impersonation;
- Lack of competency, capacity
or legal authority of a party;
- Deed not joined in by a necessary
party (co-owner, heir, spouse, corporate officer, or business partner);
- Undisclosed
(but recorded) prior mortgage or lien;
- Undisclosed (but recorded)
easement or use restriction;
- Erroneous or inadequate legal descriptions;
- Lack of a right of access; and
- Deed not properly recorded.
An extended
coverage policy may be requested to protect against such additional defects as:
- Off-record matters, such as claims for adverse possession or prescriptive easement;
- Deed to land with buildings encroaching on land of another;
- Incorrect survey;
- Silent (off-record) liens (such as mechanics'
or estate tax liens); and
- Pre-existing violations of subdivision
laws, zoning ordinances or CC&R's.
Subject to availability
in your locale, an extended/advanced policy may also cover all of the risks listed above, plus:
- Post-policy forgery;
- Forced
removal of improvements due to lack of building permit (subject to deductible);
- Post-policy construction of improvements by a neighbor onto insured land; and
- Location and dimensions of insured land (survey not required).
