Modern Abstract and Title is dedicated to giving you an all inclusive experience that is why, with our many other services, we also provide title insurance. This is an insurance policy to protect a buyer against loss which could occur from title defects. The premium is paid once and provides coverage for the owner for the duration of ownership. This is a way to protect yourself if, down the line, after the property has been purchased and closed something, not found during the title/abstract search, comes to light which could threaten the closed title.
Protecting your investment
For most our home is usually the largest single investment any of us will ever make. When you purchase a home, you will purchase several types of insurance coverages to protect your and home and personal property. Homeowners insurance protects against loss from fire, theft or wind damage. Flood insurance protects against rising water. But what can be done to protect against the hidden title hazards, that may threaten the financial investment of your home? There is only one type of insurance that will protect you in the event of hidden title defects, Title Insurance.
The largest single investment
Many people do not understand title insurance, as well as other types of home insurance, are equally important to protecting your home. When you purchase your new home, you are actually purchasing the title to the property- or the right to occupy and use the space. The title could be limited by rights and claims asserted by others, which may limit your use and enjoyment of the property and could bring financial loss. Title insurance will protect you against these types of hazards.
Other types of insurance protect you against future events, and you pay annual premiums. Title insurance is unique and protects you against loss from hazards and defects that already exist in the history of the title, and is purchased with a one-time premium.
Two types of Title insurance
There are two basic types of title insurance:
- Lender or Mortgagee protection
- Owner’s Coverage
Lender’s Policy: Most lenders require mortgage title insurance as security for their investment in real estate, just as they may call for fire or flood insurance coverage as investor protection. When title insurance is provided, lenders are willing to make mortgage money available, even when they have little market knowledge. This policy only protects the lender’s interest. Only the outstanding loan balance will be covered by this policy; the lender’s policy will expire once the loan has been repaid.
Owner’s Policy: The owner’s policy lasts as long as you, the policyholder –or your heirs- has an interest in the insured property. This could even be after you’ve sold the property. Depending on local practices and state law where the property is located, you may pay an additional premium for an owner’s policy or you may pay a simultaneous issue charge- typically a smaller amount- for the separate lender coverage. You may even split settlement costs with the seller for the lender or owner’s policy.
What does my premium really buy?
An important part of title insurance is focusing on eliminating risk before insuring. This provides you, as the policy holder, the best possible chance of avoiding title claim and loss.
Title insuring begins with a search of public land records, affecting the real estate concerned and compiling the abstract of title. An attorney will examine the abstract of title records on the property concerned and provide an opinion of the marketability of title and determine if it’s insurable. The examination of the evidence found in the abstract is intended to fully report all “material objections” to the title. Frequently, documents that don’t clearly transfer title are found in the “chain” or history that is assembled from the records.
Here are a few examples of what could present concerns:
- Deeds, wills or trusts that contain improper wording or incorrect legal names
- Outstanding mortgages and judgements, or a lien against the property because the seller has failed to pay taxes
- Easements that allow construction of road or utility line
- Pending legal action against the property that could affect a purchaser
- Incorrect notary acknowledgements
Through the abstracting and examination process, title problems are discovered and disclosed so they can be corrected or cured whenever possible. However, even the most careful preventative work cannot guarantee to locate all the hidden title hazards.
Hidden title defects, your last chance.
Attorney’s and abstractors spend years to develop their expertise and dedication to abstracting and examination, and still hidden hazards can emerge after closing, resulting in unpleasant and expensive surprises. Here are a few examples of hazards not found prior to closing:
- Forged signature on the deed, which would mean no legal transfer of ownership to you
- An unknown heir of a previous owner who is claiming ownership of the property
- Instruments executed under an expired or fabricated power of attorney
- Errors in the public records
Title insurance offers protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims. All this protection for a single one-time charge at closing.
Ask us about protecting your most important investment with an Owner’s Title insurance policy through Modern Abstract & Title.