Title Insurance

Protecting your interest with title insurance

A title is documentation of ownership of real property. Title insurance covers you and your lender in case of any title issues that can arise. Some issues that can arise from a title that happened before you owned the property. Some title issues that can arise are improper or forged title documentation, unpaid debt by previous property owners, issues of ownership that result from wills, or trusts. These issues are called clouds or blemish on the property title.

Types of title insurance

There are two types of title insurance. The first is a policy that protects the lender. Mortgage lenders only require a lenders title policy. The second is the owners title policy. This will ensure buyers ownership rights after you buy the home. It’s important to be aware of this and prepare to buy your own title insurance.

Title insurance works like regular coverage in that not only will it give you peace of mind that you’ll be absolved from legal disputes that can be tied to the property that preceded your ownership, but it also comes with a ‘chain of title’ report. This report is done by a licensed title professional. This chain of title is a search and it looks for defects, inconsistencies and other events or documentation that could negatively affect you.

Some things that can affect a title are:

• Liens that precede the new homeowner
• Unpaid taxes
• Unpaid water bills to the city
• Unpaid HOA dues
• Bequeathed property to another individual from a newly discovered will
• Forgery and or fraud
• Undisclosed heirs to a property
• Inconsistent wills
• Improper paperwork and recordings at closing
• Missing information
• Transfers of deed determined to be illegitimate

Title insurance can also cover additions called “riders” or policy endorsements. Riders cover the following…

• Others easements on your property
• Building ordinance violations
• Boarder line disputes
• Subdivision restrictions
• Private restriction violations
• Zoning violations

The title commitment will detail what is covered in your insurance and will be issued before closing. Keep in mind that coverage will vary depending on state. The title comes with a number of reports and records known as the property abstract or the chain of title. This is all the detail of former owners of the property. The title should list potential encumbrances, easements, access to hunting grounds, and any liens that may have been imposed in the past such as for unpaid taxes or mortgage payments.

What is a cloud on a title?

A cloud on the title is a result from a lien or an encumbrance. Information on this is found in city or county archives. Title insurance is a one-time fee. This is typically rolled into the closing costs. The lenders title policy lasts the duration of the mortgage. The owners title policy lasts for as long as the homeowner owns the home.