| Q. |
What does title insurance insure? |
| A. |
Title insurance offers protection against claims resulting from various defects (as set out in the policy)
which may exist in the title to a specific parcel of real property effective on the issue date of the policy.
For example, a person might claim to have a deed or lease giving them ownership or the right to possess your
property. Another person could claim to hold an easement giving them a right of access across your land. Yet
another person may claim that they have a lien on your property securing the repayment of a debt. That property
may be an empty lot or it may hold a 50-story office tower. Title companies work with all types of real property.
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| Q. |
How much can I expect to pay for title insurance? |
| A. |
This point is often misunderstood. Although the title company or escrow office usually serves as a meeting
ground for closing the sale, only a small percentage of total closing fees are actually for title insurance
protection. Your title insurance premium may actually amount to less than one percent of the purchase price
of your home and less than ten percent of your total closing costs. The title policy is good for as long as
you and your heirs own the property with the payment of only one premium.
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| Q. |
Why are separate owner's and lender's title insurance policies issued? |
| A. |
Both you and your lender will want the security offered by title insurance. Your home is an important purchase,
and you will want to be certain your home is yours, all yours. Title insurance companies insure your rights and
interests in order to protect you against claims.
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| Q. |
What are my chances of ever using my title policy? |
| A. |
In essence, by acquiring your policy, you derive the important knowledge that recorded matters have been searched and
examined so that title insurance covering your property can be issued.
Because title insurance companies are risk eliminators, the probability of exercising your right to make a claim is
very low. However, claims against your property may not be valid, making the continuous protection of the policy all
the more important.
When a title company provides a legal defense against claims covered by your title insurance policy the savings to you
for that legal defense alone will greatly exceed the one-time premium.
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| Q. |
What if I am buying property from someone I know? |
| A. |
You may not know the owner as well as you think you do. People undergo changes in their personal lives that may affect
title to their property. People get divorced, change their wills and engage in transactions that limit the use of the
property and have liens and judgments placed against them personally for various reasons.
There may also be matters affecting the property that are not obvious or known, even by the existing owner, which a
title search and examination seeks to uncover as part of the process leading up to the issuance of the title policy.
Just as you wouldn’t make an investment based on a phone call, you shouldn’t buy real property without assurances as to
your title. Title insurance provides these assurances.
The process of risk identification and elimination performed by the title companies, prior to the issuance of a title
policy, benefits all parties in the property transaction.
Title insurance minimizes the chances that adverse claims might be raised, and by doing so reduces the number of claims
that need to be defended or satisfied. This process keeps costs and expenses down for the title company and maintains
the traditional low cost of title insurance.
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