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What Protection Does Title
Insurance Give?
It insures that the
"record" title, is good subject only to the exceptions expressly set
out in the Policy. lt also insures against certain matters which do not appear
of record, such as forgery, identity of parties, incompetence of former owners,
interest of missing heirs, and status of individuals not having the
"right" to sell property.
What Risks Are Not Covered?
The standard owners policy
and standard mortgage policy are based on public records of the recording
district in which the land is located. It does not insure against matters which
would only be disclosed by actual inspection or survey of the property. It does
not insure against certain matters not shown by the public records such as
unrecorded easements, liens or money obligations; unrecorded utility rights of
way, public or private roads, community driveways and other types of
encumbrances, or against the rights or claims of persons in possession of the
property which are not shown by the public records.
Can Protection Be Obtained Against
Matters Not of Record?
Upon application, the
issuing company may specially cover matters which are disclosed by a physical
inspection and/or a survey of the property, subject to any exceptions which the
inspection will determine to be proper. An additional risk premium is charged
for this type of coverage. Insurance of this kind is called 'extended coverage'.
Are There Different Kinds of
Policies?
Yes. Owners Policies are
issued to real estate owners. Purchasers Policies are issued to purchasers of
real estate under contract. Mortgage Policies are issued to mortgage companies.
In addition there are several other special forms of policies. There is a type
of policy to meet the requirements of almost any form of real estate
transaction.
When
Is the Policy Issued?
An owner's policy protects
only the owner while a Mortgage policy protects only the holder of the mortgage
on the property. Separate policies are required to protect both interests.
Special rates are available when both Owner's and Mortgage policies are applied
at the same time.
The Owners Policy
of title insurance usually is issued after the deed to the buyer is 'delivered'
and recorded. A Purchasers Policy is usually issued after the contract has been
executed by both parties or after the signed contract has been recorded. The
mortgage policy of title insurance is usually issued after the mortgage or deed
of trust has been properly executed and recorded.
If I Was Insured When I Bought the
Land, Why Should I Have It Re-Issued to My Purchaser When I Sell?
The coverage of your
policy is against all matters that appeared of record up to the date of issuance
of your policy. Since that time many documents may have been recorded, some of
which may affect the title to your land. Taxes and assessments may have accrued
and be unpaid. There may have been actions in court affecting your title. The
purchaser is entitled to have full information and protection as to the
condition of the title right up to the date of his purchase. In addition, there
may be matters of record which would prevent either the seller or buyer from
selling, buying, or mortgaging land until such matters have been cleared. These
items include such things as federal tax liens, judgements, incompetencies,
divorce actions and other conditions which the title search may disclose.
How Are Premiums for Title
Insurance Determined?
Title Insurance Premiums
are determined by the amount and type of coverage provided. Unlike other
insurance premiums, however, the title insurance premium is paid only once as
the policy is effective for so long as title or "ownership" remains in
the name of the insured, or his heirs or devises. Rates are filed with the
insurance commissioner who regulates the activities of title insurers. |
