All About Title Insurance

How to Protect Your Real Property Against Hidden Risks

So... you're buying a house! Owning a home continues to be one of the most important parts of the American dream. But having the deed to a piece of land does not necessarily mean the property is yours free and clear. Other people may have certain prior rights or claims that your deed will not erase. Such rights can go all the way back to the earliest owners of your new property.

You want to be sure that you will remain the true owner and that there will be no claims or liens against your new home other than the mortgage you have agreed to pay.

When you "close" on your mortgage loan, title insurance may be included in the amount you pay. Known as a loan or lender's policy, it insures that the mortgage company will receive up to the full value of the policy if the company suffers a loss.

You can protect your interest in the property you just bought with a policy called owner's title insurance.

An owner's title insurance policy describes the property and defines your ownership "limitations" if there are any . Limitations could be in the form of existing liens or items disclosed to you before you agreed to the purchase. In other words, these are the limitations you accept when you buy the house.

Owner's title insurance protects you against what you don't know. It takes the risk out of buying property with a long legal history that you may not know about in its entirety.

The "hidden risks" covered by such a policy are not common, but they do exist. If they exist in relation to your property, you could lose the property and the money you paid for it!

The mortgage company has a loan policy to protect its interest in the money it lent you. You should protect your own interest with owner's insurance.

Even though most properties have no risks when a title for real property is transferred to your name, risks are possible.

The land and building(s) could have been owned by many different people over the years, and there is a chance for error each time the title was transferred. If an error did occur, but was not discovered until you bought the property, it could put your ownership in question.

With an owner's title insurance policy, you are protected from such errors. These are called "hidden risks."

Title insurance also provides these coverages:

• Protection from financial loss due to covered claims against your title up to the face amount of the policy
• Payment of your legal costs if the title insurance company is required to defend your title against covered claims
• Payment of successful claims against your title up to the face amount of the policy
• Protection even after you no longer own the property

Some of the more common hidden risks covered under owner's title insurance are:

• False impersonation of the true owner
• Confusion caused by similar names
• Forged deeds and other documents
• Signatures of minors or people who are not mentally competent
• Signatures of people represented as single but who are actually married
• Errors in recording legal documents
• Clerical errors in public records
• Invalid documents executed under an expired power of attorney
• Invalid divorces
• Unpaid child support lien
• Unpaid taxes (local, state, federal)
• Unrecorded easements (rights of way)

• If you decide you want owner's title insurance, companies offer "simultaneous issue credit" as long as you buy the owner's insurance within 30 days of closing. Simultaneous issue credit decreases the amount of your premium.
• Any insurance policy is only as sound as the company that issues it.