Frequently Asked Questions
Why Do I Need Title Insurance?
When you purchase your home, you and your lender needs to determine that there are no problems with the property’s title and that the seller really owns the property. Problems with the title can impact your ownership of the property, leading to a possible financial loss and restrictions on your use of the property. That is why a title search is performed and a title insurance policy is issued to protect your ownership.
The Loan Policy
There are two types of title insurance policies: Owners Title Insurance, as described below, and Lenders Title Insurance, also called a Loan Policy. Most lenders require a Loan Policy when they lend you money and require a mortgage as collateral for their loan. The Loan Policy is based on the dollar amount of your mortgage and only protects the lender’s interests in the property should a problem with the title arise. It does not protect the buyer or you. You only pay one time, atclosing, for the title insurance policy. You do not pay annually like a home owners policy. The amount of policy coverage decreases each year as the mortgage is paid down and eventually disappears when the loan is paid off.
The Owners Title Policy
What happens if a Title problem come to light after you move in? Sometimes title problems occur or manifest themselves after closing, that could not be found in the public records or were missed or overlooked or not filed or indexed correctly at the County Recorders Office. To help protect you from these unforeseen events, you need an Owners Policy of Title Insurance. Your Owners Title Policy is usually issued for the purchase price. You pay a one-time fee at closing and the policy covers you for as long as you or your heirs have an ownership interest in the property. Only an Owners Title Policy fully protects you should an insured title problem arise or should a title problem that was undiscovered during the title search arise. Additionally, and perhaps most importantly, purchasing an Owners Title Policy will protect you against these potential problems and pay for any legal fees involved in defending a claim. LEGAL DEFENSE COSTS ARE ROUTINELY COVERED. This benefit alone often justifies buying the Owners Title Policy and paying the one time title insurance premium.
Possible hidden title problems can include:
-
Errors or omissions in deeds
-
Mistakes in examining records
-
Forgery
-
Undisclosed heirs
Your Owners Policy protects you against title claims arising from any insured title problem that may be discovered after you buy your property or for which you have title insurance coverage. That means your title company will be there to help pay valid claims and cover the costs of defending an attack on your title. It is important to know that obtaining an Owners Policy isn’t necessarily an automatic part of the closing process. Lawyer Title Services strongly recommends the purchase of an Owners Policy and will include the cost of an Owners Policy in your title quote. For a one-time fee paid at closing, the Owners Policy protects you for as long as you or your heirs have an interest in the property.
Refinancing
When you refinance you are obtaining a new mortgage, even if you stay with your original lender. Your lender will usually require a new title search and Loan Policy to protect their investment in the property. You will not need to purchase a new Owners Policy; the one you bought at your original closing is good for as long as you and your heirs have an interest in the property.
Even if you recently purchased or refinanced your property, there are potential problems that could arise with the title. For example, you might have incurred a mechanics lien from a contractor who claims they have not been paid. Your neighbor may have an error in their mortgage that erroneously includes your property. A person with a similar name might have a judgment which would show up in the new title search There may be unpaid real estate taxes, homeowner dues, or a municipal assessment. The lender wants reassurance that the title to the property being financed is clear of all encumbrances.
The Title Search
Once there is a valid legally enforceable purchase agreement signed by Seller and Buyer, Lawyers Title Services staff will search the public records to retrieve all title records relevant to the property. The search typically involves a review of land records going back many years. It’s a fact that title searches often uncover a title problem of some kind that must be corrected before closing. For example, a previous owner may have had construction done on the property but never fully paid the contractor, who subsequently obtains a lien on the home. Or the previous owner may have failed to pay local or state taxes, which also become a lien on the property that must be paid before ownership can be transferred to you. Lawyers Title will work to resolve any title problems like these before you go to closing. Lawyers Title will often resolve routine or common title problems and will work with your attorney or legal counsel.