Title insurance property protection or waste of money

TITLE INSURANCE: PROPERTY PROTECTION OR WASTE OF MONEY?

Sources: Artesian Title morganperrylaw

What is Title Insurance?

The decision to purchase a home (or other real property) is one of the most important financial decisions you may ever make. However, having the deed to a piece of land does not necessarily mean the property is yours outright. Other people may have certain prior rights or claims that your deed will not erase. Such rights can go back all the way to the earliest owners of your new property. You will want to make sure that you will remain the true owner and that no one will have liens, claims, or encumbrances on your property — other than those which you agreed to.

Title insurance is a contract that protects against losses resulting from various types of defects, as described in the policy, that may exist in the title of a specific parcel of real property. This protection is effective as of the date on which the policy is issued. Title companies issue policies on all types of real property. It insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans. Title insurance protects your investment indefinitely.

You need to get it.

How it Works Title insurance is different than your ordinary insurance plans.

Most other types of insurance are designed to insure future events; you make a reoccurring payment to continue your policy in the future. For example, homeowner’s insurance will cover any unfortunate situations from the moment you purchase your home, and going forward while you own it.

Title insurance is different. When you purchase title insurance it will not only cover for the future throughout the entire time that you own the property, but it also covers every kind of title issue with a property that has happened in the past. Whether you own the property for six months or 50 years, there will never be a difference in your coverage. Title insurance is also different in that it does not have to be renewed.

An important part of title insurance is its emphasis on eliminating risk elimination the title company chooses to insure. This means that the purchaser has the best possible chance for avoiding claims to the title and potential loss. The process of title insuring begins with a search of public land records for matters affecting the title to the real estate.

Title companies will check for defects in your title by examining public records including deeds, mortgages, wills, divorce decrees, court judgments, tax records, liens, encumbrances and maps. The title search determines who owns the property, what outstanding debts are against it, and the condition of the title.

Title companies maintain title “plats” which contain information regarding property liens and transfers. A search is intended to fully report all material objections to the title. Often it is found that instruments in the chain (history) of ownership do not pass title to real property free and clear.

These problems in the title search need to be corrected before a clear title can be conveyed. Some of the instruments that can present concerns include: - Deeds, wills and trusts that contain improper conveyances and incorrect names - Outstanding mortgages, judgments and tax liens - Easements - Incorrect notary acknowledgments Title problems like these are disclosed by a search so that they can be cleared up as soon as possible. But even the most careful preventive work cannot always locate hidden hazards of the title.