Title
Insurance.
It’s a term we hear and see frequently - we see reference to it in the Sunday
real estate section, in advertisements and in conversations with real estate
brokers. If you’ve purchased a home before, you’re probably familiar with the
benefits and procedures of title insurance. But if this is your first home, you
may wonder, “Why do I need another
insurance
policy? It’s just one more bill to pay.”
The answer is simple: The purchase of a home is most likely one of the most
expensive and important purchases you will ever make. You, and your
mortgage lender, want to make sure that the property is indeed
yours - lock, stock and barrel - and that no individual or government entity has
any right, lien, claim to your property.
Title
insurance
companies are in business to make sure your rights and interests to the
property are clear, that transfer of title takes place efficiently and correctly
and that your interests as a homebuyer are protected to the maximum degree.
Title insurance companies provide services to buyers, sellers, real estate
developers, builders, mortgage lenders and others who have an interest in a real
estate transfer. Title companies routinely issue two types of policies -
“owner’s”, which cover you, the homebuyer; and “lender’s”, which covers the
bank, savings and
loan
or other lending institution over the life of the loan. Both are issued at the
time of purchase for a modest, one-time premium.
Before issuing a policy, however, the title company performs an extensive
search of relevant
public
records to determine if anyone other than you has an interest in the
property. The search may be performed by title company personnel using either
public records or more likely, information gathered, reorganized and indexed in
the company’s title plant.
With such a thorough examination of records, any title problems usually can
be found and cleared up prior to your purchase of the property. Once a title
policy is issued, if for some reason any claim which is covered under your title
policy is ever filed against your property, the title company will pay the legal
fee involved in defense of your rights, as well as any covered loss arising from
a valid claim. That protection, which is in effect as long as you or your heirs
own the property, is yours for a one-time premium paid at the time of purchase.
The fact that title companies work to eliminate risks before they develop
makes the title insurance decidedly different from other types of insurance you
may have purchased. Most forms of insurance assume risks by providing financial
protection through a pooling of risks for losses arising from an unforeseen
event, say a fire, theft or accident. The purpose of title insurance, on the
other hand, is to eliminate risks and prevent losses caused by defects in title
that happened in the past. Risks are examined and mitigated before property
changes hands.
This risk elimination has benefits to both you, the homebuyer, and the title
company: it minimizes the chances adverse claims might be raised, and by so
doing reduces the number of claims that have to be defended or satisfied. This
keeps costs down for the title company and your title premiums low.
Buying a home is a big step emotionally and financially. With title insurance
you are assured that any valid claim against your property will be borne by the
title company, and that the odds of a claim being filed are slim indeed.
Isn’t sleeping well at night, knowing your home is yours, reason enough for
title insurance?
