Title insurance protects you against covered title defects, like a previous owner's debt, liens, and other claims of ownership that may have been instituted prior to purchasing your home.
How is it different than traditional insurance policies?
Title insurance protects against past problems, whereas other insurances, like property and casualty, deal with future risk. You pay for an owner's policy of title insurance once; there are
no ongoing premiums.
What type of policies?
Loan Policy is required by a mortgage lender to protect against title defects that could affect the lien of the lender's mortgage and are effective for the life of the loan.
Owner's Policy is a separate policy that helps protect you against title defects that could affect your ownership rights and lasts as long as you or your heirs retain an interest in the property or remain liable for any warranties on the title.
Most common title claims:
Liens typically relate to the priority of a mortgage lien in relation to other such liens on the property and other types of liens attached to the property such as state or federal tax liens or other court judgments.
Basic risks can include fraud, forgery, undisclosed heirs, marital rights, recorded notices of zoning violations or building permit violations, and improper legal description of property.
Encumbrances are defects in insured title otherwise not excepted in the policy, such as missing interests, easements, or other recorded rights.
Escrow and closing errors are problems due to improper execution of closing documents, improper recordings, and certain agent defalcations.
75% to 85% of claims are made within the first six years of the life of the policy.
The title insurance process includes a title search and title examination. Title search is a search of public records that helps title professionals find possible title defects and associated risks. Title examination identifies title defects, issues preliminary title report/title commitment, and identifies curative actions.
On average, a title policy order closes approximately 55 to 70 days after the order is opened.
Stability and Reputation of the Company: The company you choose will be responsible for handling the money in your transaction so making sure the company enjoys a good reputation and subscribes to industry best practices, including escrow controls is very important. You’ll also want assurance that the title policy is underwritten by a financially stable company able to pay potential claims in the future.
Staffing and Service: Proactive and timely communication, attention to detail and experience are crucial when processing real estate transactions. Choose a company that has invested in its professionals and technology as it can be the difference between a smooth transaction and a “nightmare” transaction.
A word about fees: Fees that are charged for title and settlement services can vary from company to company. That said, the majority of companies will charge fees that are within a couple hundred dollars of one another. So, while fees should be evaluated, cheaper fees are not necessarily better. In fact, when dealing with what is most likely your largest asset, the true measure of a title company is the service and expertise that they deliver.
When it comes to your title insurance and important settlement questions, Gregg County Title is here to make your home buying and selling process less complicated and more enjoyable; because your property is our priority.
— * The following is a courtesy contribution (not an affiliation): original article written by Keith Barrett, Vesta Settlements.