What is Title Insurance?
Title insurance protects the insured against covered title defects affecting the insured property. Title Insurance offers coverage against defects in title caused by fraud, forgery, incapacity, impersonation or the seller’s lack of authority to sell the property. The premium for an owner’s policy of title insurance is only paid once and covers you for as long as you hold an interest in the title to your home. The coverage automatically continues for the benefit of your heirs as well.
What is a Title Search?
A Title search is a detailed examination of the historical records concerning a property. The purpose of the search is to verify the seller’s right to transfer ownership, and to discover any claims, defects and other rights or encumbrances on the property.
Your home may be new to you, but every property has a history. There may be hidden issues in the chain of title which could affect your ownership, such as: Errors in Public Records, Unknown liens, Illegal deeds, missing heirs, forgeries, undiscovered encumbrances, unknown easements, boundary/survey disputes, undiscovered will and false impersonation of previous owner.
What is a Title Commitment?
Schedule A– This section contains the “Who, What, Where and How Much” details of the transaction. Schedule A sets forth the effective date, the names of the current property owner (seller) and propsed insured (buyer), the legal description of the property, the amount of insurance (sales price), and the name of the lender and loan amount if applicable and available.
Schedule B-I -The requirements section lists the items that must be cleared-up or satisfied in order to issue a policy covering the new owner and/or the lender. Examples include: requiring approval of a bankruptcy trustee, requiring other persons- such as an heir or former spouse- to execute closing documents, or requiring the release of various types of liens.
Schedule B-II – This section notifies the buyer and/or lender of exceptions from coverage. Examples include: restrictive covenants, mineral or water rights, or utility easements. These exceptions from coverage will not be insured on the title policy.
What is a Lenders Title Policy?
A lender’s title policy does not cover you. Your lender may require for you to pay for a lender’s title policy but that policy only provides insurance to the lender. A homeowner is not covered, and cannot make a claim, under a lender’s policy of title insurance.