Title Insurance

The below topics are discussed in much more depth on our members' Title Insurance page.

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      Title insurance is a type of insurance that covers certain matters related to a property or the title thereto.  Title insurance provides an "indemnity" against loss or damage as a result of defect in title ownership to a particular piece of property.  Title insurance covers mistakes made during a "title search" as well as matters which could not be found or discovered in the public records such as missing heirs, mistakes, fraud and forgery.  It protects lenders and/or owners against loss of their interest in property due to legal defects in title.  Insurance benefits will be paid only to the "named insured" in the title policy, so it is important that an owner obtain an "owner's title policy", if he desires the protection of title insurance.
     

Title insurance is not available in all states.  In those states where not available, the buyer must depend upon an abstract of title, showing the chain of title, that is typically prepared by an attorney.
      In many states, title insurance is automatically part of any real estate sale transaction.  It is almost always required by any lender involved.  Except under very special conditions, title insurance should be utilized in every purchase transaction in any state where it is available.  The cost is reasonably low and including title insurance in the transaction not only offers significant risk reduction, but also gives one access to information and services that are often useful, if not downright necessary.  For example, the title company will usually provide copies of documents associated with the parcel including Deeds of Trust, Easements, and other documents mentioned in the Preliminary Title Report.
      Most buyers do not know that there are two types of title insurance -- The Standard Owner's Policy of Title Insurance and The Extended Owner's Policy of Title Insurance -- and many agents do not understand the difference or, even if they do, fail to inform buyer about them.
      Although entirely negotiable between the parties, in most areas the seller traditionally pays for the title insurance and in many other areas the cost is traditionally shared equally by the buyer and the seller.  Where the seller is expected to pay for title insurance, he is not usually going to want to pay the extra cost for Extended coverage.  If the seller will not provide Extended coverage, the buyer will always have the option of paying the difference.
      The Standard policy includes both certain specific coverages and certain fairly general exceptions.  The Standard policy insures against matters that are of public record only.

The Standard policy will contain a Schedule B - Part I which will state a number of things that are not covered by the policy.

      An Extended Owner's Policy of Title Insurance insures against both matters that are of public record and various matters that are not of public record.

The above topics are discussed in much more depth on our members' Title Insurance page.