SALE BY OWNER

When you purchase a home you’ll be required to purchase and maintain many types of insurance. Title insurance is probably the least understood of these. So what is title insurance and why do you need it? We’ll try to provide you with answers here.

When you purchase a home you’re actually paying for title to the land; this means you acquire the right to occupy and use the space. Part of the price paid will be for the improvement, or the actual home, but the major cost of most property is the land itself. The title may be restricted by rights and claims of others; this could in turn limit your use and enjoyment of the property and even bring financial loss. Title insurance insures against these situations.

While other forms of insurance protect against future problems, title insurance protects against things which have already happened. Other forms of insurance also charge annual premiums while they insure. Due to the nature of protecting against problems from the past, on the other hand, title insurance is a one time premium.

A central aspect of title insurance is the elimination of risk prior to issuance of coverage. A claim or loss is a losing situation for all parties and every attempt is made to eliminate this possibility early on. The process of researching the history of a title begins with the public records. An agent for the title company investigates the title chain to determine if any “material objections” exist. These issues are normally the results of documents which did not transfer the title clearly.

Examples of these documents would be:

Deeds, wills and trusts that contain improper wording or incorrect names;
Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes; Easements that allow construction of a road or utility line.
• Pending legal action against the property that could affect a purchaser; or
• Incorrect notary acknowledgements.