WHAT YOU SHOULD KNOW
ABOUT TITLE INSURANCE
WHY YOU NEED IT
Title insurance provides protection much like other insurance products, but with some differences. A title company looks at the past history of a property and tells you the items of record which are important for your understanding of the property and future ownership. We look at how the property was passed from owner to owner and inspect the documents to determine if there are gaps in the chain of title (a prior owner who still has a claim to ownership), signs of forgery, fraud or incorrect recording, misinterpretation of legal documents, access, easements and liens. From there we determine what needs to be done in order to pass the property to the new owner and give the owner "clear title". Title insurance is important for peace of mind, and to reassure you that there is someone on your side, if an issue arises.
An owner's policy involves paying a one time fee for insurance that remains in effect for as long as you or your heirs own the property. In an owner's policy, we insure the new buyer that the seller has the right to sell the property, there are no other parties that can claim ownership in the property and that we will help you in case a valid claim arises. Usually an owner's policy is issued for the purchase price of the property. We search the property and notify the new buyer of items relating to the property. This gives the buyer prior knowledge to any items which may affect their ownership and title insurance coverage.
A lender's policy is a product offered to lender's which insures the lender they are in the proper lien priority position and that no additional problems with the title will arise. This means, we check to make sure all other liens are paid in full and the lender's new lien will be the only lien on the property as well as checking the chain of title for previous errors. This is very important to lenders because they want to know that no other lender will be able to claim priority over their lien and they are protected from errors in title. Each time you refinance or get a new loan you will need to purchase a lender's policy. The lender's policy is only transferable to a new lender if the original loan is transferred but not paid in full and released. Once you get a new loan, the new lender needs to be insured.
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