Frequently Asked Questions
What is Title Insurance?
A title insurance policy offers protection against claims or challenges relating to title or ownership interest in real property.
What are the different types of Title Insurance?
Typically, there are two types of title insurance policies involved in most real estate transactions: (1) a LOAN policy, which serves to protect the lender, and (2) an OWNER’S policy, which serves to protect the buyer/owner.
Who pays for Title Insurance?
For transactions when the buyer obtains a loan to finance the purchase of the property, the lender commonly requires the procurement of a Loan policy, the cost of which is typically paid by the buyer. Although negotiable, the seller ordinarily pays for the Owner’s policy.
How long does Title Insurance coverage last?
For the buyer, the policy typically lasts for as long as the buyer or his/her heirs retain an ownership interest in the property. For the lender, the policy is effective up and until the loan is paid in full.
What issues can a Title Search reveal?
The primary purpose of a title search is to confirm the seller’s ownership interest in the subject property, and to identify any title defects that may exist on the subject property. Some of the more basic title defects commonly identified include, but are not limited to, the following: unpaid taxes, unsatisfied mortgages, prior judgments against seller, and restrictions limiting the use of the land.
However, there are certain “Hidden Hazards” that even the most detailed title search may not reveal. In the event these hazards materialize after your purchase has been finalized, your ownership rights could be threatened significantly if you failed to secure an Owner’s title insurance policy on your property.
Possible “Hidden Hazards” include, but are not limited to, the following:
- Clerical/Recording Errors
- Forged/Unauthorized Signatures
- Defective Deeds
- Undisclosed/Missing Heirs
- Expired/Forged Powers of Attorney
- Mental Incompetence
What is Escrow?
The “escrow” process was initially developed as a system for protecting the funds and documents to be transferred at closing by and between the buyer, seller and/or lender. An ‘escrow agent” is a neutral party designated by the parties to hold the transaction funds and/or documents until the appropriate time for disbursement (typically at closing).
