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"Title Insurance" involves a one-time premium that buys a policy to safeguard your property should such difficulties arise. It protects the buyer from claims on his land, and provides the peace of mind and a legal guarantee that once you have purchased it, it is yours, or the title company must pay you for damages.
It's called a "Marketable Title", proof that your property is free and clear of prior indebtedness or other defects or encumbrances. It is the most critical part of the home buying process that you walk away with a marketable title. Unfortunately, the process is a little more complicated than it may seem.
You should never accept a deed, the transfer document the seller warrants your title against claims of other persons, without a thorough title examination of the property. This involves its complete legal history.
In some cases, more today than ever, the process uncovers title defects that could put your ability to take a clear title in jeopardy.
This is where your attorney comes in. If his or her research reveals title defects, you can compel the seller to undertake legal proceedings to clear it. This includes hidden flaws that may escape the examination and put your ownership in question, even after you've closed. Examples of title defects include:
That's why title insurance isn't really an option. It's your only protection from these defects. If you're forced to defend your title in court, the insurer agrees to pay the costs.
Your lender will insist on title insurance in the amount of the mortgage loan. Unfortunately, a lender's policy or mortgagee policy doesn't protect your ownership interest. You need an owner's policy.
The owner's title insurance policy is an agreement that the insurer will pay all losses involved in any claim covered by the policy terms. The policy provides two types of coverage:
The fee is modest, a one-time premium that continues, in effect, forever, even after you sell your home. The policy is issued in an amount equal to the purchase price of the property or its market value.
Many companies sell title insurance. But you're taking a chance if you use a title agency not affiliated with a law firm. They only prepare documents for closing and issue your title insurance policy. The title agency cannot represent your legal interests and cannot give you legal advice.
An attorney representing your interests:
An attorney representing your interests is the most reassuring way to conduct a thorough title examination and issue an owner's policy.
It's very likely the single largest purchase you'll ever make. You should have someone there who will represent your interests. Exclusively.
That's why we recommend you have a real estate attorney there throughout the entire process, ideally before a contract is prepared. He or she can explain the things essential to your purchase, such as:
And he or she will ensure the following is executed:
The final stage of the process is the closing. It is here that your attorney will make sure the documents carry out the parties' actual intent as originally expressed in the contract, and meet requirements for a marketable title. Although the hiring of an attorney is not a mandatory step in the closing process, we recommend that you seek the advice of a local real estate attorney.
If you need assistance please feel free to ask...