Frequently Asked Questions
There are two basic forms of title insurance: an Owner’s Policy and a Lender’s Policy. An Owner’s Policy protects the interests of the owner in the event of a claim and is issued with coverage up to the purchase price. A Lender’s Policy issued to protect the interests of the lending institution solely, with coverage up to the mortgage amount.
There are many title issues that could cause you to lose your property or your mortgage investment. Even the most careful search of public records may not disclose the most dangerous threat: hidden risks. These issues may not be uncovered until years later.
Here are some of the issues that occur most frequently:
- Deeds by persons supposedly single, but secretly married
- Deeds delivered after death of grantor, without consent of spouse
- Deeds in lieu of foreclosure given under duress
- Marital rights of spouse purportedly, but not legally, divorced
- Impersonation of the true owner of the land
- Deeds by minors
- Deeds by persons of unsound mind
- Deeds to or from defunct corporations
- Defective acknowledgments by notaries
- Duress in execution of instruments
- Erroneous reports furnished by tax officials
- Forged deeds, releases, etc.
- Misrepresentation of will
- Mistakes in recording legal documents
- Surviving children omitted from will
- Administration of estate of persons absent but not deceased
- Birth or adoption of children after date of will
- Claims of creditors against property sold by heirs or devisees
- Deeds by foreign parties
Without title insurance from a reputable and financially solvent company, your title could be worthless. With the proper insurance, your rights will be defended in court. Click here for our online Title Insurance Application!
- It is an insurance policy of indemnification.
- The policy of indemnification states that it will defend your interest in the property. It will pay you the amount of money, which represents the loss of value to your land as a result of a proven claim.
- It is not a policy of guarantee. No one can or will guarantee that a claim, valid or not, will not be made against the title to your land now or in the future.
- It is in full force and effect so long as the insured, or their heirs, has an interest in the property.
- It is a one time premium – no renewal premiums are due.
The Lender’s policy only insures the Lender’s interest as a result of their mortgage. Their coverage does not extend to the owner.
The four main coverages are:
- Title vested as shown
- Hidden title defects
Defective conveyances caused by: forgery, fraud, mental incompetence, previous owner incorrectly stating his or her marital status, Grantor’s name incorrectly stated, errors in the legal description, deed filed after death of Grantor (no delivery), and title transferred by someone under age. Other defects caused by: undisclosed heirs, errors in public records, errors by abstractors, errors by title examiners and difference of opinion by title examiners.
Every attorney knows that there are hazards in real estate titles that cannot possibly be discovered through even the most diligent search of the public records. For instance, the attorney cannot be sure that the marital rights of all previous owners have been properly relinquished; that all mortgages, judgments, etc., affecting the property have been properly indexed at the county recorder; that there is no unknown heir of a former owner who can appear to assert a claim. These are but a few of the matters that can crop up to defeat real estate titles. Among others are such things as fraud, duress, infancy, insanity, false impersonations, etc.
Your Owner’s policy protects you against mistakes in your title or threats to your title, which might otherwise result in a financial loss to you. Your Owner’s policy will promptly defend against any claims against your title at no cost to you, whether the claim is valid or not. Should you decide to refinance/sell your property in the future, you will be assured of the marketability of your title and your title processing costs will be reduced.
Coverage for survey matters is not automatically provided. If you are interested in obtaining survey coverage, contact your closing agent for more information.
The cost of an Owner’s policy will depend on the value of the property or the purchase price. If there is a Mortgagee’s (Lender’s) policy done at the same time, you are entitled to a discount. One premium, based on the amount of the sale or mortgage, is paid when the policy is issued for the life of the policy. Please Contact Us for a quote.
Curious what “closing,” “settlement,” or “closing escrow” on your house mean? Let’s start at the beginning. Closing – or settlement as it is known in some parts of the country — is a term used for the point in time at which the title to the property is transferred to the buyer and, generally, a mortgage (or “deed of trust”) is given by the buyer/borrower to the lender.
Buying a house is an exciting time and the more you know about the process, the more relaxed you’ll be going through it. Keep reading, and we’ll walk you through what the closing process really means.
Some information about the costs associated with closing on your home should be provided to you before you put a contract on a house. If you are obtaining a loan to purchase the property, your lender has three days from the time of the loan application to provide you with a Good Faith Estimate of your loan costs so there are no surprises about costs. Within those three days you should also receive a copy of the booklet, “Buying Your Home,” which outlines the settlement process. If these two things do not occur, talk to your lender.
Once the seller accepts your sales contract, the countdown to closing begins. Timing is essential to make sure all the ingredients for a successful closing are in place for your arrival. You can shop around to select a settlement agent to prepare the documents for your closing, or you can rely on a recommendation from your real estate agent or lender. In some parts of the country, the settlement agent is an attorney, title company, or escrow company. Once a settlement agent has been selected, he or she will handle the closing process from there. If you have given the seller an earnest money deposit, the escrow agent, settlement agent, or real estate broker (this varies based on where you live), will see that it is promptly deposited into an escrow account where the funds are held until the time of closing.
Next, the settlement agent will request preliminary title work. A title professional will search and examine the public records for information related to your home’s title. This provides warnings of title flaws that must be dealt with before the property can change hands. For instance, the previous owner may have failed to pay local or state taxes. Or there may be an outstanding mortgage or judgement on the property. Title professionals work hard to see that such obligations are dealt with and resolve any issues they find well before you go to closing, if possible. If the sales contract calls for a prior mortgage to be paid off, the settlement agent will order payoff figures from the existing lender. If the buyer is assuming the loan, the settlement agent handles that as well. He/she, if directed to do so, also may order property inspections and termite reports. If it is customary in your area, the settlement agent may order a survey.
Finally the settlement agent is ready to prepare the HUD-1 Settlement Statement. The HUD-1, as it is referred to, outlines all of the costs for both the buyer and seller associated with the closing.
On closing day, the property will be transferred from the seller to the buyer. In most parts of the country, you will sign a number of documents that will be explained by your settlement agent. Check with your settlement agent for more details on how the closing is conducted in your area. Once all of the signing is done, the house is yours! Congratulations on achieving the American Dream!
You should be generally aware that the behind-the-scenes process continues after the closing. The settlement agent still must forward payment to any prior lender, pay all the other parties who performed services in connection with your closing, pay out any net funds to the seller, and order a final search of the title to your new home before finally recording all the documents needed legally to complete your purchase. But you don’t have to be involved in any of this. Your settlement agent takes care of these post-closing details!