With few exceptions, a home represents the largest single investment most people
make in their lifetime. Thus it is only natural that an owner will want to make
that investment secure by protecting the basic proof of ownership. Title
Insurance is the most effective and lowest cost way of doing just that.
What is a Title?
A title is the evidence or right which a person has to the ownership and
possession of land. A defect in that title can be any legal right held by
someone other than the owner to claim property or to make demands on the owner
of that property.
What is Title Insurance?
Title insurance is a contract to protect an owner against losses arising through
defects in the title to real estate owned. If the title is insurable, the
company guarantees the owner against loss due to any defect in title or
expenses in legal defense of the title pursuant to the terms of the policy.
What can make a Title defective?
There are many possible causes of title defects that no examination can
disclose. That is because they have never been recorded and thus do not appear
in the abstract. A title insurance policy protects the owner against all these
hidden risks; those listed below and many more:
- Fraud
-
False claims of ownership, forged deeds, wills, signatures, conveyances,
instruments, false representations, false records of all sorts, illegal acts of
trustees, guardians, administrators, and attorneys.
- Human Error
-
Errors in copying, indexing, recording; errors by administrators, executors,
trustees, guardians and attorneys; destruction of records.
- Improper Deeds and
Wills
-
Deeds by persons of unsound mind, minors; deeds delivered after death or
without the grantor's consent; invalid, suppressed, erroneous wills, missing
heirs, unsettled estates.
- Liens and Other Rights
- Liens for unpaid estate, inheritance, income,
property and gift taxes; homestead rights, community property rights; irregular
court proceedings, court opinion reversals, lack of court jurisdiction;
defective foreclosures.
Owner's policies and lender's policies
A lender will often require a title policy for their protection alone. Such a
policy does not protect the owner. To protect themselves against possible title
defects an owner should purchase an owner's title insurance policy on the
property.
Why buy Title Insurance?
When a person buys a car or consumer goods, they seldom need to know whether
the former owner is married, single or divorced; whether they have paid their
taxes or are involved in a lawsuit. But when a person buys a home it is
necessary to have all that information and much more. For while he may own the
property, others may also have rights in that same real estate.
A competent investigation can uncover such items as unpaid taxes, easements,
restrictions and more. However, all items affecting the title are not contained
in a single book, in a single office or even in the same city. Then, add to
this, the possibility of human error at a multiplicity of points. Yet what is
not in the public records often causes title problems.
For all these reasons and many more, a property owner needs the protection
afforded by title insurance.
