Why do I need title insurance?

It is certainly an understatement to say that purchasing your home is an important decision. But how do you know that the property you purchase has a clear title? This is where title insurance comes in and why it is so important.

Is it REALLY necessary for me to have this type of insurance?

Some kinds of insurance, you can buy or pass up. Some you don’t have a choice. One of those is title insurance, which your mortgage lender will require when you buy or refinance a home.

How does title insurance protect me?

Title insurance protects you and your lender if someone challenges your title to the property because of title defects that were unknown when you bought the policy.

Possible hidden title problems can include:

  • Errors or omissions in deeds
  • Mistakes in examining records
  • Forgery
  • Undisclosed heirs  
  • Liens for unpaid taxes
  • Liens by contractors

By getting title insurance, you’re assured the property title is free from the problems of hidden liens and claims. 

What is the process to assure I have proper title to the property?

Public records for the property are searched to find problems in the title’s ownership and history. Title searches start with the most recent deed, searching the grantee’s name (the person now holding title) backward in time until the deed when the grantee acquired the property is located.

That grantor’s name is then searched backward in time in the grantee’s book to find when the grantor acquired title as a grantee. This process continues, and over time, the property description involves larger and larger parcels of land. Eventually, the searcher finds the U. S. Patent.

What do they look for in the search?

Basic Owner’s Title Policy Coverage:

  • Clear title to the property
  • Incorrect signatures on documents
  • Forgery, fraud
  • Defective recordation
  • Restrictive covenants
  • Encumbrances or judgments

Basic Lender’s Title Policy Coverage:

  • Mechanic’s liens and unrecorded liens
  • Unrecorded easements and access rights
  • Defects and other unrecorded documents

Extended Owner’s Coverage

  • Building permit violations from previous owners
  • Subdivision maps
  • Covenant violations from previous owners
  • Living trusts
  • Structure damage from mineral extractions
  • Variety of encroachments and forgeries after title insurance is issued

Additional Tips:

  • Make sure the title policy amount is for the full value of the property
  • Check to see that the policy date matches the closing date of the escrow
  • The policy must describe all the property and interests you are purchasing
  • Many title insurers offer a discount when both a lender and an owner policy are purchased at the same time
  • Ask your title insurer if you qualify for other discounts
  • Make sure the company you select meets your standards and those of your lender