Mortgagee Title Insurance protects the lender’s loan exposure, and Owner’s Title Insurance protects the Owner’s equity by:
- Providing a corporate indemnity against insured defects
- Paying all legal expenses to eliminate any title defects
- Paying any claim arising from errors in title examination and recording
- Paying any loss from hidden defects in title and defects not of record.
The owner has this protection forever, even on the warranties in the Deed of Sale.
Q. Couldn’t the title be searched and a report/opinion be given?
A. Yes. But title insurance goes further than this report/opinion. If a defect in your title– any defect not shown as an exception in your policy– should turn up later, your title insurance provides a corporate indemnity against loss within the limits of the policy.
Q. But I thought the bank or lending institution always had the title insured?
A. It usually does. But its policy only insures its own interest in your property. You could lose your equity if you do not have your own policy.
Q. Is Owner’s Title Insurance as important to me as fire or property damage protection?
A. Yes. Loss from title deficiencies can be as great as, or greater than, fire or other damage. Title insurance protects your equity in the property against title defects.
Q. If Owner’s Title Insurance is so important, isn’t it expensive?
A. No. OWNER’S TITLE INSURANCE is one of the least expensive forms of insurance.
Q. And do I pay only one premium?
A. Yes. And this one modest premium insures your home for as long as you or your heirs have an interest in it.
Q. Just what is a title defect?
A. It is any one of a number of things that could jeopardize your interest. It could be an unsatisfied mortgage, lien, judgment or other recorded claim against the property. It could arise through easements, use restrictions or other existing covenants. Or it could be a hidden risk. See list of possible hidden risks.
Q. You mean an OWNER’S TITLE INSURANCE POLICY insures against these title defects occurring?
A. No. But OWNER’S TITLE INSURANCE does eliminate the risk of loss to you through claims against the title as described in your policy. The insuring company assumes all legal expenses involved in adjudicating claims and protects you against any loss
whatsoever arising from claims attacking your title, within policy limits, even though they may occur through errors made in public records.
Q. If I didn’t have OWNER’S TITLE INSURANCE, how serious would a claim against my home be to me personally?
A. It could be very serious. It would mean you would have to withstand all expenses involved with the defense of your rights, and could even result in complete loss of your equity if your defense proved unsuccessful.
Q. What should I look for in selecting a company to insure my title?
A. Sound reputation for paying claims, financial stability, experience, efficient and dependable service to policy holders.
Q. What Hidden Title Defects are Covered By an Owner’s Policy of Title Insurance?
A. Owner’s Title Insurance will protect you against the following hidden risks:
- Fraud in connection with the execution of documents
- Undue influence on a grantor or executor
- False impersonation by those purporting to be owners of the property
- Incorrect representation of marital status of grantors
- Undisclosed or missing heirs
- Wills not properly probated
- Mistake interpretation of wills and trusts
- Mental incompetence of grantors
- Conveyance by a minor
- Birth of heirs subsequent to the date of a will
- Inadequate surveys
- Incorrect legal descriptions
- Non-delivery of deeds
- Unsatisfied claims not shown on the record
- Deeds executed under expired or false powers of attorneys
- Confusion due to similar or identical names
- Dower or courtesy rights of ex-spouse or former owner
- Incorrect Indexing
- Clerical errors in recording legal documents
- Delivery of deeds after the death of a grantor
Information provided from Investors Title Insurance Company.