F.A.Q.

Your Questions Answered

What is title insurance?

Title is a collective term that makes up your legal right to own, possess, use, control and dispose of land. Title takes into account all previous ownership, uses and transfers. In order to legally transfer real estate property, a title search much be performed, and in most cases the title must be determined as clear or free of defects or encumbrances.

Why do I need title insurance?

There are two types of title insurance policies: a lender's policy (also called a loan policy) and an owner's policy. The lenders policy usually does not represent the full property value. An owner's policy protects the landowner and can financially cover the full property value. While a loan policy is often required as a part of a real estate transaction, an owner's policy generally is considered optional.

With an owner's policy, the landowner is protected against any title loss which ensures the value of the property. Because a title policy is considered insurance, if a claim is made against the title, the title insurer must pay any and all costs associated with defense against the challenge and, if unsuccessful in that defense, reimburse the landowner for any reduction in the value of the land.

What problems can be discovered in a title search?

A title search should show all title defects and encumbrances as well as liens and other restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land.

What problems ARE NOT covered by a title search?

Yes. There are some hidden hazards that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his or her marital status, resulting in a possible claim by a legal spouse. Other hidden hazards include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you have purchased property and can jeopardize the right to ownership.

The previous owner has title insurance on the property I am buying, so why do I need it?

A title policy insuring the sellers does not protect you. Also, many things could have happened to the land since that owner's policy was issued. Your seller could have a new mortgage, a home equity loan, judgments or unpaid taxes that would not be covered in the seller's title policy.

How long does title insurance last?

The lender's policy of title insurance lasts until the mortgage is paid in full. An owner's policy of title insurance lasts for as long as you or your heirs retain an interest in the property.

Is title insurance the same as homeowner's insurance?

No. A title insurance policy is available to homebuyers that ensures the title, or ownership to the property is without defect and is marketable. a homeowners policy insures against natural hazards such as fire, flood, etc. depending on the coverage obtained. Title insurance is a one time fee and is good for as long as you own the home. Homeowners insurance is renewed semi-annually or annually.

How much does title insurance cost?

Rates vary depending on the purchase price or the mortgage amount. If you would like a personal quote for your purchase, please contact Susan Engelke at 618-656-1275.