Title is your legal right to own, possess, use, control and dispose of property.
Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. Title insurance is a one-time premium that is paid at settlement that insures against events that occurred in the past of the real estate property and previous owners. Included in the title premium is the title search and exam of various public records to find and isolate title risks. This is intricate and tedious work, as information can be missing or filed inconsistently. These searches can identify any potential title risks, such as unreleased mortgages, mechanics liens, tax judgments, pending bankruptcy or divorce proceedings, etc.
One out of three searches turns up a title issue that can affect a buyer’s property ownership rights. Once identified, title professionals may take measures to remedy these problems, or otherwise insure against (or around) the identified risk. Standard coverage handles such risks as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy.
The lender’s policy only covers the amount of the loan and is required for a mortgage and financially covers the amount of the mortgage and provides protection for the lender. An owner’s policy protects the landowner against any title loss and insures the full value of property. In the event of a claim, there is no provision for payment of legal expenses for an uninsured party. When a loan policy is being issued, the small additional expense of an owner’s policy is a bargain.
The owner’s policy lasts for as long as you retain an interest in this property. The lender’s policy lasts until the mortgage is paid in full.