I get this question from realtors, buyers and sellers regarding title policies with every transaction I close.
* Title insurance indemnifies the insured when they have a loss because of covered defects, liens, or encumbrances that were not disclosed but existed on the date of the policy; the title company will either defend title and make it good or compensate the insured for the loss, up to the face amount of the policy.
FACTS OF AN OWNER’S TITLE POLICY
* In the scope of buying and selling a house, title insurance is a bargain, a small one-time fee and the home is secured for a lifetime.
* Each buyer needs to purchase a new policy.
* Your owner’s policy protects you for as long as you own the property. It will also protect you after you sell the property if a title problem is discovered later as you retain liability after the sale.
* Title insurance covers current, past and now some future risks.
* Title insurance losses have never been higher and more and more money is being paid out in claims. More problems come to light as the real estate market is weak, producing many more foreclosures, which is when title problems are discovered.
* One in four titles searched identify title problems that need resolution.
* The terms of the owner’s policy dictate that the title insurer will pay to defend all claims, regardless of whether the claim is legitimate.
WHY PEOPLE BUY AN OWNER’S TITLE POLICY
* Even the best title examination cannot detect fraud or a forged signature on a document, or that a legally binding, but unrecorded document exists. False impersonation of the true owner; forged deeds, releases, or wills: deeds by persons supposedly single, but in fact married; and unpaid estate, inheritance, gift, or other taxes are just a few examples of common claims.