Why Title Insurance?

What is Title?

Title Insurance affords protection from past events which may or may not be a part of the public records, but that can adversely affect a new owner’s interest in the property being sold to them.

Title Insurance protects against matters of public record, plus hidden title defects, such as fraud, forgery, incompetence or missing heirs, that even the most diligent title search may not discover.

Protecting your Home Investment

A home is typically the largest single investment any person will ever make. When you purchase a home, you will purchase several types of insurance coverage to protect your home and personal property. Flood insurance protects against rising water and floods. Homeowner's insurance protects against loss from theft, fire or wind damage. And a title insurance policy protects against hidden title hazards that may threaten your financial investment in your home.

"How can a title failure occur?" or "What are these hidden title hazards?" Listed below are a few of the "hidden risks" that are covered under an owner's policy:

• Documents executed under false, revoked or expired powers of attorney;
• Deeds by minors;
• Prescriptive rights in another not appearing of record and not disclosed by survey;
• Improperly recorded legal documents;
• Undisclosed heirs;
• Defective acknowledgements due to improper or expired notarization;
• Corporate franchise taxes as liens on corporate real estate assets;
• Gaps in the chain of title;
• Deeds which appear absolute, but which are held to be equitable mortgages;
• Forged deeds, mortgages, wills, releases of mortgages and other instruments;
• False impersonations of the true property owner;
• Mistakes and omissions resulting in improper abstracting;
• Inadequate legal descriptions;
• Errors in tax records;
• And there are more…

Protecting Your Largest Single Investment

Title insurance is not as well understood as other types of home insurance, but it is just as important. You see, when purchasing a home, instead of purchasing the actual building or land, you are really purchasing the title to the property - the right to occupy and use the space. That title may be limited by rights and claims asserted by others, which may limit your use and enjoyment of the property and even bring financial loss. Title insurance protects against these types of title hazards.

Other types of insurance that protect your home focus on possible future events and charge an annual premium. On the other hand, title insurance protects against loss from hazards and defects that already exist in the title and is purchased with a one-time premium.

Two Kinds of Title Insurance benefit You in Two Different Ways

• Lender or mortgagee protection
• Owner's coverage

Lender or Mortgagee Protection

Most lenders insist upon title insurance with every loan because they want nothing to affect their security interest in your property. However, a lender’s title insurance policy does not protect the owner’s interest. In many instances, you must specifically request that owner’s title insurance be issued. If the lender considers title insurance to be vital to protect its interest in your property, shouldn’t you? Be sure to ask the closing officer if an owner’s title insurance policy is going to be issued to you.

Owner's title insurance lasts as long as you, the policyholder - or your heirs - has an interest in the insured property. This may even be after you have sold the property.

Depending on local practices and state law where the property is located, you may pay an additional premium for an owner's policy or you may pay a simultaneous issue charge - usually a smaller amount - for the separate lender coverage. You may even split settlement costs with the seller for the lender or owner's policy.

Owners Policy-Homeowner

Just as lenders want security with their loan policy, you should want to protect your investment with an owner's title policy. For a low, one-time premium you can receive an owner's title insurance policy to protect your property against "hidden risks" or undiscovered interests. Be sure to ask your title agent for an owner's policy.

The Owner's Policy Provides:

Protection From Financial Loss due to covered claims that may be asserted against the title to your property, up to the face amount of the title policy.

Payment Of Legal Cost if the title insurer has to defend your title against a covered claim.

Payment Of Successful Claims against the title to your property covered by the policy, up to the face amount of the policy.

Title insurance adds security and peace of mind to your ownership. Remember that a policy issued by East Coast Land Transfer can help you prevent the potential loss of your property due to these causes as well as many others.

Owning real estate is one of the most precious values of freedom enjoyed in this country. When you decide to buy any type of real property, you want to be sure the property will be yours and that no one else will have any liens, claims or encumbrances against your property other than those disclosed to you or arranged by you (such as a mortgage).

If you are buying or selling real property, having a title policy protects the transaction and gives everyone involved peace of mind.

What does Your Premium Really Pay For?

An important part of title insurance is its emphasis on risk elimination before insuring. This gives you, as the policyholder, the best possible chance for avoiding title claim and loss.

Title insuring begins with a search of public land records affecting the real estate concerned. An examination is conducted by the title agent or attorney on behalf of its underwriter to determine whether the property is insurable. The examination of evidence from a search is intended to fully report all "material objections" to the title. Frequently, documents that don't clearly transfer title are found in the "chain," or history that is assembled from the records in a search. Here are some examples of documents that can present concerns:

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

Through the search and the examination, title problems are disclosed so they can be corrected when possible. However, even the most careful work will not always detect all hidden title hazards.

Hidden Title Hazards – The Last Defense

Despite the expertise and professional dedication that may go into a title search and examination, hidden hazards can still materialize after closing, causing unexpected and costly surprises. Some examples of hazards include:

• An unknown heir of a previous owner who is claiming ownership of the property;
• A forged signature on the deed, which would mean no transfer of ownership to you;
• Instruments executed under an expired or a fabricated power of attorney; or
• Mistakes in the public records

A Title insurance policy offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims.

Your home is your most important investment. Before you go to closing, ask about your title insurance protection, and be sure to protect your home with an owner's title insurance policy.