Title Insurance Defined and Why Have It?

Title-Insurance-Image In every real estate transaction, the matter of title insurance arises. A policy of title insurance is issued to a buyer and/or a lender to guarantee to the insured party or parties, “Free and Clear” title to the property being insured, from the beginning of time until the date and time the buyer acquires title to the property, or in the case of a lender’s policy until the date and time the lender’s loan document is recorded against the property. “Free and Clear” is defined as there being no loans, liens, encumbrances, back taxes, easements or covenants, conditions or restrictions against the property that were not disclosed on Schedule ‘B’ of the commitment for title insurance issued by the insuring company. The policy is issued for a one-time fee and will remain in effect as long as you or your heirs retain an interest in the property. This protects the buyer’s or the lender’s investment in real estate, including their legal defense against any claim or claimant. If a claim is valid, the title insurer will either resolve the title problem or pay the insured’s losses.

Why you’re At Risk

There are many title issues that can arise to cause the loss of your property or your mortgage investment. Title issues not disclosed by a most careful search of the public records, called hidden risks, are the most dangerous. Because of them, your title may be worthless or have a diminished value. Here are some title issues that can occur. You may not discover them when you buy real estate, but months or years later they can result in the loss of your property or an expensive lawsuit.

Deeds by foreign parties	Mistakes in recording legal documents
Deeds by minors	Surviving children omitted from will
Deeds by persons of unsound mind	Administration of estate of persons absent butnot deceased
Deeds to or from defunct corporations	Birth or adoption of children after date of will
Defective acknowledgements (notary)	Claims of creditors against property sold by heirs or devises
Discovery of will of apparent intestate	Deed of community property recited to be separate property
Duress in execution of instruments	Deeds by persons supposedly single, but secretly married
Erroneous reports furnished by tax officials	Deeds delivered after death of grantor/grantee, without consent of grantor
False impersonation of the true owner of the land	Deeds in lieu of foreclosure given under duress
Forged deeds, releases, etc.	Marital rights of spouse purportedly, but not legally, divorced
Misrepresentation of wills	Ultra vires deed given under false corporate resolution