Frequently Asked Questions
We know you want to do what's best for your client, but understanding titles and title insurance can be tricky. We're here to help.
What is A title?
A title is the legal right that a person has to the ownership and possession of land. If someone other than the owner of a property can establish a claim, they can claim an interest in the property outright or make demands on the owner (i.e., your client) as to its use.
How is that possible? what MAKES a title defective?
Any number of problems that remain undisclosed after even the most meticulous search of public records can render a title defective. These "defects" are dangerous because your client may not learn of them for months or even years after the purchase of their home. Once discovered, though, they could be forced to spend a significant sum of money on a legal defense that could still result in the loss of the property.
how can title insurance HELP protect my client?
Title insurance policies will typically cover a host of prior or concurrent defects on your client's title, including:
- Deeds executed under false or expired powers of attorney
- Mistaken interpretation of wills and trusts
- Incorrect representation of marital status
- Undisclosed heirs
- Mistakes in recording legal documents
- Incorrect legal descriptions
- Forged deeds, releases, etc.
- Federal or state inheritance and gift tax liens
- Errors in tax records
- Federal condemnation without notice filing
- Capacity of foreign fiduciaries
- Duress in execution of documents
- Want of jurisdiction over persons in judicial proceedings
- Deeds from minors or non-existent entities
- Discovery of later will after probate of first will
- Easements by prescription not discovered by a survey
- Deeds delivered after death of grantor or grantee, or without consent of grantor
- Deeds from incompetent persons
THIS IS CONFUSING. CAN YOU GIVE ME AN EXAMPLE?
Absolutely. Let's say that, after weeks and weeks of searching, your clients finally found their dream home. They made their $35,000 downpayment and have just settled into their new house. Suddenly, they learn that a child born after the date of the seller's will is claiming his interest in their property. After an exhausting (and expensive!) legal contest, that child's claim could be found to be valid. If it is, your clients will lose both their home and their downpayment.
Owner's title insurance not only protects them from actual financial loss covered by a title problem but also provides the same protection to their heirs for as long as they own the property. Their title insurer even agrees to bear the full cost of defending them against any such covered claims.
What's the difference between an owner's policy and a lender's policy?
A Lender's Policy only insures that the financial institution your client is borrowing from has a valid, enforceable lien on the property. The Owner's Policy, on the other hand, is designed to protect your client from title defects that existed prior to the issue date of their policy. It also covers the full cost of any legal defense of their title for any covered matter. (In a nutshell, the Owner's Policy protects your client as an owner. The Lender's Policy does not.)
How much does title insurance cost?
It varies based on a number of factors, including the type of home your clients are purchasing and where it's located. But know this: it's typically less expensive than an annual car insurance. Your client pays it once when they purchase their home, and it continues to provide coverage for as long as they or their heirs own the property.
when should i start looking into this?
Give us a call as soon as both your buyer and the seller have signed the earnest money contract. With a brief summary of the details, we can begin searching public records and issue a title commitment in time for your closing date.