Frequently Asked Questions
What should I bring to closing?
The following items are generally required to be produced at closing:
- Photo ID
- Cashier’s Check
- Original proof of Homeowner’s Insurance
- Termite and/or Septic letters if required by lender or sales contract
Do I need title insurance?
Ultimately, the decision is yours to make. The following questions are designed to help you determine whether title insurance is right for you. However, if you still are not sure, contact your attorney or real estate professional for further information.
What is title insurance?
A policy of title insurance is a contract of indemnity between the insured and insuring company relating to the title to the land prescribed in the policy. Title insurance protects insured against loss or damage arising from reasons or title defects, liens or encumbrances on the insured title existing at the date of the policy and which are not specific exceptions from its coverage.
In layman’s terms title insurance provides the homeowner and/or lender financial protection for any damages they incur as a result of some unknown or unforeseen legal problem involving their interest in the real property that is the subject of the transaction. Like most forms of insurance, there are certain exceptions to the coverage spelled out in the policy. Also, the cost of defending one’s title is provided to all policyholders.
What does title insurance cover?
Many title problems that may arise cannot be discovered by an ordinary title search. The following problems are generally covered by title insurance:
- FRAUD – False claims of ownership, forged deeds, wills, signatures, conveyances, instruments, false representations, false records of all sorts, and illegal acts of trustees, guardians, administrators, and attorneys.
- HUMAN ERROR – Errors in copying, indexing, or recording of titles and errors by administrators, executors, trustees, guardians, and attorneys. This may possibly include destruction of records.
- IMPROPER DEEDS & WILLS – Deeds by persons of unsound minds or minors; deeds delivered after death or without the grantor’s consent; invalid, suppressed or erroneous wills, missing heirs, and unsettled estates.
- LIENS & OTHER RIGHTS – Income and property taxes; homestead rights, community property rights; irregular court proceedings, court opinion reversals, lack of court jurisdiction; defective foreclosures.
What risks are not covered?
Title insurance policies are issued based on information gathered from a thorough examination of the public records of the county in which the real property is located. Said examinations are generally conducted by attorneys or qualified independent title searchers, and are usually based on a minimum 30 year chain of title going back from the date of closing. Said policies do not insure against matters that would only be disclosed by actual inspection or survey of the property, such as the number of acres. They also do 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 who are not shown by the public records.
So, what protection does title insurance give?
Title insurance insures that the “record” title is good, subject to the exceptions expressly stated in the Policy. It also insures against certain matters, which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interests of missing heirs, and status of individuals not having the “right” to sell property.
What is the difference between a lender’s policy and an owner’s policy?
There are two different kinds of title insurance policies. A lender’s policy, also called a mortgagee’s policy, is issued to the mortgage lender and provides coverage in the amount of the loan. An owner’s policy is issued to the owner of the property and provides coverage in the amount of the purchase price.
Do I need both an Owner’s and Lender’s Policy?
Some think that as long as the lender’s policy is in place to cover the mortgage there is no need to have any additional coverage. However, a lender’s policy does not provide for reimbursement of the homeowner’s equity in the property. Therefore, if the homeowner has made a large down payment, or has paid the principal down on his/her mortgage prior to a title issue arising, the homeowner could potentially lose any rights to their equity without the protection of an owner’s policy. Also, keep in mind that title insurance, unlike your homeowner’s or auto insurance, requires only a one-time premium that insures the homeowner for so long as they own the property.
For more information on title insurance, go to our Links page and visit our Title Insurance Providers.