Step By Step Title Insurance

When purchasing real estate, you acquire title to the property. This title includes your rights of ownership and possession of the land. Sometimes, however. your rights to the property can be limited due to claims asserted by others.

These potential claims, if not caught and corrected before you buy, can limit your title to the property, have a negative impact on the value of your home and threaten the interest that you and your mortgage lender hold in the property.

Acquiring Title Insurance

Title insurance is a welcome "security blanket"for home ownership because of the significant investment you make when buying a home. Purchased as a one-time expense, title insurance covers you against loss due to potential pre-existing liens and hazards that may not be uncovered in a general title search.

The Importance of a Title Search

Despite the expertise and dedication that go into a title search, hidden title defects can emerge after completion of a real estate transaction, leaving you without a clear title. Title defects can be an unpleasant and costly surprise. Some examples include:

Previously undisclosed heirs with claims against the property
A forged deed that doesn't transfer title to real estate
Instruments executed under expired or fabricated power of attorney
Mistakes made in public records

Title insurance is a simple step you can take to protect yourself against loss or damage due to potential problems with your title. Ask your real estate professional to learn more about this valuable service.

Researching a Title

A title insurance company will perform a title search before issuing an insurance policy. This labor-intensive process searches the history of public records for your property (It's not uncommon to find liens on properties that date back over 100 years!). The search results may uncover items that need to be corrected before a clear title can be conveyed, such as:

Outstanding mortgages, judgments and tax liens
Deeds, wills and trusts that contain improper vestings and incorrect names
lncorrect names
Incorrect notary acknowledgements
Easements

The buyer's title company will issue a preliminary report on The property. A preliminary report gives the buyer, seller and lender an opportunity to review any potential title defects that a re to be cured or shown on the title policy.

What Title Insurance Covers

There are different types of title insurance policies that can be purchased by the buyer, seller or by the leader. Title insurance is typically issued in the amount of the real estate purchase.

CLTA/ALTA Homeowner Policy

A CLTA/ALTA Homeowner policy is intended to insure the owner of residential property against loss by reason of those matters covered under the policy.

This policy covers:

Plain language.
Post policy automatic increase in value up to 150%.
Title to the real property owned by a person other than the insured.
Defects, liens and encumbrances upon title that are not recorded.
Lack of a right of access to and from the real property.
Insuring that there are no forgeries or failed conveyances in the chain of title.
Protection against mechanic's liens resulting from work done on the real property that the insured did not agree to pay for.
Rights under unrecorded leases.
Unrecorded easements.
There are restrictive covenants.
There is a lien on your title because (1) a deed of trust, (2) a judgement, tax or special assessment, (3) a charge by the homeowner's association.
Title is unmarketable.
Forced removal of a structure because it (1) extends on to other land or easement, (2) violates a restriction in Schedule B, (3) violates an existing zoning law.
Cannot use land for Single Family Dwelling because the use would violate a restriction in Schedule B or a local zoning ordinance.
Pays rent for substitute land
or facilities.
Unrecorded lien by a homeowner's association.
Building permit violation.
Compliance with Subdivision Map Act.
Restrictive covenant violations.
Post policy forgery.
Post policy encroachment.
Post policy damage from mineral or water extraction.
Post policy living trust coverage.
Map not consistent with the legal description.
Post policy adverse possession.
Post policy prescriptive easement.
Covenant violation resulting in reversion.
Boundary walls and fence encroachment.
Enhanced marketability.
Violations of building setbacks.
Discriminatory covenants.
Insurance coverage forever.

ALTA Loan Title Insurance Policy

An ALTA Loan Title Insurance policy is intended to insure an institutional lender under a deed of trust upon any type of real property(commercial, industrial, residential) against those matters covered under the policy.

This policy covers:

Title to the estate or interest being vested other than as stated therein.
Any defect in or lien or encumbrance on the title.
Unmarketability of the title.
Lack of a right of access to and from the land.
The priority of any lien or encumbrance over the line of the insured mortage.

For an in-depth explanation of title insurance, and for assistance in choosing the policy that is right for you, please work with your real estate professional and your title representative.

Acquiring Title Insurance

The Importance of a Title Search

Researching a Title

What Title Insurance Covers

Contact Us

Buying Resources

Selling Resources

About Us