Why Title Insurance?
To Protect Your Most Valuable Asset From Hidden Risks
Real estate has traditionally been a family’s most valuable asset and as such, many laws have been enacted to protect your property from risks, most of which are hidden, inherent in real estate transactions. When a piece of property is being sold, it it crucial to identify all interested parties with rights or claims to the property being purchased. For example, in addition to heirs and spouses, other less “obvious” parties may have a claim or “lien” on the property which could prevent the proper transfer of ownership. Such parties might include governmental bodies to whom property taxes are owed, contractors who have worked on the property but were never paid or lenders with a mortgage on the property–to name but a few. These rights or claims remain attached to the property until they are extinguished. If you proceed to close on a piece of property encumbered by a claim or lien, you could lose a significant amount of money and the property. Our goal at Top Tier Title is to identify possible “clouds” on title to the property so we can correct them before you buy. In addition, title insurance provides protection against “hidden” or undiscovered claims covered by your policy that can threaten your ownership of property.
The Past Can Determine Your Future
Generally, a person thinks of insurance in terms of payment for a loss due to the occurrence of some future event. For instance, a party may obtain automobile insurance to cover damage occasioned by a future “fender bender.” Title insurance is a unique form of insurance insofar as it covers future loss due to title defects created by some past event, i.e., an event that occurred prior to the acquisition of the property. These risks are far less obvious than those protected against by automobile insurance, but can be just as devastating. It is therefore crucial to hire a title company willing to “dig deep,” identify potential issues and minimize the risks involved. The following information will answer some commonly asked questions about title insurance.
How Do You Find Out If Claims Exist?
In order to determine the status of title, a thorough search of the public records is conducted for documents associated with the property. We then examine the recorded documents to determine if there are any rights or claims impacting title to the property. The title search may reveal the existence of recorded defects, liens or encumbrances upon the title such as unpaid taxes, unsatisfied mortgages, judgments or tax liens against current or past owners, easements and/or restrictions–to name but a few. These recorded defects, liens or encumbrances are reported to you prior to your purchase of the property. Once reported, these matters can be accepted, resolved or extinguished prior to closing. Title insurance protects you against loss or damage resulting from recorded defects, liens or encumbrances upon the title that are unreported to you and which are within the scope of coverage of the particular policy issued for the transaction. This is the first benefit you receive from title insurance.
How Can There Be A Title Defect If The Title Has Been Researched?
Title insurance is issued after a careful examination of copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be discovered by a search.
What About Undiscovered Claims?
Title to the property that you have purchased could be seriously threatened or lost completely by hazards which are considered “hidden risks.” Hidden risks are those matters, rights or claims that are not discoverable by a search or examination of the public records. Matters such as forgery, incompetency or incapacity of the parties, fraudulent impersonation and unknown errors in the records are examples of hidden risks which could provide the basis for a claim after you have purchased the property. See our “Hidden Risks” section for a more comprehensive list of potential risks. Title insurance protects against loss or damage resulting from certain hidden risks or defects. This is the second benefit you receive from title insurance.
Only One Premium
Unlike other forms of insurance, the original premium is your only cost as long as you or your heirs own the property pursuant the terms of the applicable policy. There are no annual payments to keep your Owner’s Title Insurance Policy in force.
What This Means To You?
The peace of mind in knowing that the investment you’ve made in your home is a safe one.