The process of acquiring real estate necessitates protection of real estate title from adverse claims. Owners and lenders use title insurance to prevent and defend claims against title. Below are the answers to frequently asked questions regarding title insurance.

Q: What is title?

A: 1. The union of all elements (as ownership, possession, and custody) constituting the legal right to control and dispose of property; the legal link between a person who owns property and the property itself. 2. Legal evidence of a person's ownership rights in property; an instrument (such as a deed) that constitutes such evidence. Black's Law Dictionary (8th ed. 2004), title.

Q: What is title insurance?

A: Title insurance is a policy of protection against loss if certain problems – even hidden hazards – result in a claim against your ownership. Title insurance offers financial protection against these potential problems by negotiating with third-parties, and paying claims and legal fees involved in defending the title.

Q: What types of title insurance policies exist?

A: There are two (2) types of title insurance policies:

1) Lenders title insurance, also known as a Loan Policy. Most lenders require a Loan Policy when they issue a loan. The Loan Policy is usually based on the dollar amount of your loan. It protects the lender's interests in the property should a problem arise with the title. The policy amount decreases each year and eventually disappears as the loan is paid off. The Loan Policy does not protect the borrower.

2) Owner's title insurance, known as an Owner's Policy, is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts as long as you or your heirs have an interest in the property. Only Owner's Policy fully protects the buyer should a problem arise with the title that was not uncovered during the title search. Owner's title insurance also pays for any legal fees associated with the defense of a claim to your title.

Q: What is a title search?

A: An examination of the public records to determine whether any defects or encumbrances exist in a given property's chain of title. Black's Law Dictionary (8th ed. 2004). Public records may include name indexes, deeds, mortgages, wills, divorce decrees, court judgments, tax records, liens, claims, maps, and any other documents in the public records.

Q: What is the purpose of a title search?

A: The purpose of a title search is to verify the seller's right to transfer ownership, and to discover any claims, defects and other rights or burdens on the property.

Q: What kinds of claims, defects and other rights or burdens will a title search discover?

A: A title search can discover a number of title defects, liens, encumbrances, and restrictions. Examples include unpaid taxes, unsatisfied mortgages, judgments against the seller, liens and restrictions limiting the use of land.

Q: Are there kinds of claims, defects, and other rights or burdens that a title search cannot reveal?

A: Yes. Some hazards to title are hidden so the most expansive and diligent title search may not reveal any issues. Possible hidden title issues include but are not limited to false impersonation of the true owner of the property; forged deeds; missing heirs; deeds by persons allegedly single, but in fact married; liens for unpaid estate, inheritance, income or gift taxes; errors in deeds (or other public documents); forgery; fraud; and, conflicting wills.

Q: How much could I lose if a claim is filed against my property?

A: Depends. In extreme cases, you could lose the entire property and still be liable to pay off your existing mortgage. Most claims are not that extreme, but even the smallest claims can cost time, money, and aggravation. However, if a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense; pay all court costs, and related fees. Also, if the claim proves valid, in accordance with the terms of your policy, you will be reimbursed for your actual loss up to the face amount of the policy.

Q: How am I protected by title insurance?

A: In order for us to issue a title insurance policy we must search the public land records for matters affecting title. Issues discovered during the search that can be resolved by the title company are taken care of prior to the transfer of title to the property.

Of course, because of hidden hazards sometimes the search does not discover the issues that need to be resolved. Owner's title insurance offers financial protection against these by negotiating with third parties, and paying the claims and legal fees associated with defending the title.

Q: How long does the owner's title coverage last?

A: For as long as you or your heirs retain an interest in the property.

Q: The owner of the property I want to purchase has lived in the home for less than one year. He had a title search done when he received the property. Why do I need another one?

A: Because even in a limited period of time the owner could have caused encumbrances on the title to the property. For example, he could have granted easements or constructed improvements that encroach on adjacent property. It is necessary to conduct an up-to-date title search to uncover any such issues.

Q: If the builder of my home already has title insurance on the property, then why do I need to purchase title insurance when I buy the property?

A: A title policy insuring the builder does not protect you. Also, contractor liens, judgments, and unpaid taxes for which prior owners were responsible could be discovered after you purchase the property and then you would be responsible for the issues they create.

Q: I am refinancing my home, why do I need title insurance?

When you are refinancing you are obtaining a new loan. Your lender will require a loan policy to protect their investment in the property. You will not need to purchase a new owner's policy because the one purchased at the original closing is good for as long as you and your heirs retain an interest in the property.

If it has been less than 10 years since you purchased or last refinanced, then ask for a reissue or discount rate. Not every state offers reissue or discount rates, but an inquiry with us will inform you of any possible discount.