What is a title?
Simply stated, the title to a piece of property is the evidence that the owner is in lawful possession of that property.What is title insurance?
Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.
Title insurance is purchased with a one-time premium and provides coverage for as long as the policyholder or their heirs own the property.How long are title policies good for?
For an owner’s policy, it’s as long as the insured owner (or heirs) owns the property. For a loan or lender’s policy, as long as that current lender holds a mortgage/deed of trust on the property. What does title insurance protect against?
Here are just a few of the many title risks covered in the
American Land Title Association (ALTA) standard coverage:
• Undisclosed or missing heirs
• Lack of mental competence by grantors
• Clerical errors in recordation of documents procedure
• Judgments or liens filed against prior owners
• Conveyance by a minor
• Unsatisfied claims not shown of record or not
• Delivery of deed by non-authorized person(s)
• Incorrect indexing of documents by the recorder of
• A third party claims an interest in the title
• Documents executed under fraud or duress (pre-policy)
• Non-recorded restrictive covenantsStandard vs. Enhanced?
Extended or Enhanced owner’s policies provide broader coverage. The added protection available from enhanced title insurance coverage is usually well worth the small added cost at the time of closing or final sale.Examples of the additional types of risks covered include:
• Unrecorded easements
• Restrictive covenant violations
• Rights under unrecorded leases
• Violations of building setbacks
• Survey coverage without a survey
• Post-policy encroachment
• Post-policy automatic increate in value up to 150%
• Post-policy adverse possessionWhy do I need an Owner’s Policy if the lender has a policy?
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 it's loan became nonperforming and the claim threatened the lender's ability to foreclose and recover its principal and interest. And, in the event of a claim, uninsured party must often cover their own legal expenses.