The Most Frequently Asked Questions About Title Insurance
Many people don't know what title insurance is or what it can do for you. We've got a list of frequently asked questions about Title insurance that should help you decide if it's something you need to have.
What protection does Title insurance give me?
The primary purpose of Title insurance is that it insures that the "record" title is good. That means that the title is accurate, and the rightful owner is on that title. Title insurance does cover for a number of other problems with a title, including forgery, identity of parties, incompetence of former owners, interest of missing heirs, and status of individuals not having the "right" to sell property.
What risks aren't covered?
The standard owner's policy and standard mortgage policy are based on public records of the recording district in which the land is located. It won't protect you from problems that would only be revealed by an inspection of the property. This is only about problems that could be presented in the public records. Therefore, it does not insure against unrecorded easements, liens or money obligations, unrecorded utility rights of way, public or private roads, community driveways and other types of encumbrances, or against the rights or claims of persons in possession of the property which are not shown by the public records.
Can I get protection against matters not of record?
Yes, you can but it will be "extended coverage" and at additional cost. However, at your application the issuing company may specially cover matters that are disclosed by a physical inspection and/or a survey of the property, subject to any exceptions that the inspection will determine to be proper.
Can I get different kinds of policies?
Yes. Owners' Policies are issued to you as the owner. Purchasers' Policies are issued to you as the buyer of real estate under contract. Mortgage Policies are issued to mortgage companies. However, you can expect that if your mortgage company takes out Title insurance on your new purchase that this will be part of the fees that they pass on to you.
It may make sense for you to buy both the mortgage and owner's policy, especially if your lender will require it. You may find a better rate for the insurance. Also, special rates are available when both Owner's and Mortgage policies are applied at the same time.
When is my policy issued?
The Owners Policy is usually issued after the deed to the buyer is 'delivered' and recorded. A Purchasers Policy is usually issued after the signed contract has been recorded. The mortgage policy of title insurance is usually issued after the mortgage or deed of trust has been recorded.
How are my premiums determined?
Title insurance premiums are determined by the amount and type of coverage provided. Unlike other insurance premiums, however, the title insurance premium is paid only once. At that point, the policy is effective for as long as title or "ownership" remains in the name of the insured, or his heirs or devises. If you have a question about rates, you can get more information. Rates are filed with the insurance commissioner who regulates the activities of title insurers.
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