FAQs
Frequently Asked Questions
FAQs
1What is title insurance?
Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.
2What does title insurance protect against?
Title insurance protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy.
3Who needs title insurance?
Buyers and lenders need title insurance in order to be insured against various possible title defects. The buyer, seller and lender all benefit from issuance of a title insurance policy.
Because title insurance protects both home buyers and lenders, there are two types to suit the end user’s needs:
A lender’s policy is generally required when a lender issues a mortgage loan. The loan policy is usually based on the dollar amount of the loan and it protects the lender’s interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off.
An owner’s policy, purchased at closing, provides coverage for the homeowner. It is usually issued in the amount of the real estate purchase and is valid for as long as the owner or his heirs have an interest in the property. Only an owner’s policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search.
Possible hidden title problems can include:
• Errors or omissions in deeds
• Mistakes in examining records
• Forgery
• Undisclosed heirs
Because title insurance protects both home buyers and lenders, there are two types to suit the end user’s needs:
A lender’s policy is generally required when a lender issues a mortgage loan. The loan policy is usually based on the dollar amount of the loan and it protects the lender’s interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off.
An owner’s policy, purchased at closing, provides coverage for the homeowner. It is usually issued in the amount of the real estate purchase and is valid for as long as the owner or his heirs have an interest in the property. Only an owner’s policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search.
Possible hidden title problems can include:
• Errors or omissions in deeds
• Mistakes in examining records
• Forgery
• Undisclosed heirs