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Dec

TITLE INSURANCE - WHY IS IT IMPORTANT AND WHO NEEDS IT?

The purchase of a home is usually the most expensive and long-term financial undertaking an individual or family ever makes, therefore it is very important to fully protect their investment. The homebuyer and his mortgage lender will want to make sure the property is free of liens, claims or encumbrances and that the seller really owns the property and is free to sell it.

The basic function of a title insurance company is to take steps to minimize the risk that a policyholder will suffer any loss or be subject to any adverse claim, as well as to safeguard his ownership of the property. If title problems do arise, in spite of this preventative work, title insurance will pay for the cost of defending against an attack on the title, as well as any valid claims.

Who Needs Title Insurance? Buyers and lenders in real estate transactions need title insurance. Both want to know that the property they are involved with is insured against certain title defects. Title companies provide this needed insurance coverage subject to the terms of the policy. The seller, buyer and lender all benefit from the insurance provided by title companies.

What Does The Title Insurance Cover? Title insurance offers protection against claims resulting from various defects (as set out in the policy), which may exist in the title to a specific parcel of real property, effective on the recording date of the documents. For example, a person might claim to have a deed or lease giving them ownership or the right to possess your property. Another person could claim to hold an easement giving them a right of access across your land. Yet another person may claim that they have a lien on your property securing the payment of a debt. That property may be an empty lot or it may hold a 50 story office tower?—?title companies work with all types of real property.

What If You Are Buying Property From Someone You Know? People undergo changes in their personal lives that may affect title to their property. People get divorced, change their wills, engage in transactions that limit the use of the property or have liens and judgements places against them personally for various reasons. There may also be matters affecting the property that are not obvious or known, even by the existing owner, which a title search and examination seeks to uncover as part of the process leading up to the insurance of the title insurance policy.

The process of risk identification and elimination performed by the title companies prior to the issuance of a title policy benefits all parties in the real estate transaction. It minimizes the chances that adverse claims might be raised and by doing so, reduces the number of claims that need to be defended or satisfied.

Twenty Reasons for Title Insurance

  1. Title insurance will protect you against a loss on your home or land due to a title defect.
  2. Claims have risen dramatically over the last 30 years.
  3. Claims constantly arise due to marital status and validity of divorces.
  4. A deed or mortgage may have been made by an incompetenet or under-aged person.
  5. A deed or mortgage made under an expired power of attorney may be void.
  6. A deed or mortgage may have been procured by fraud or duress.
  7. A deed or mortgage may have been made by a person with the same name as the owner.
  8. A child born after the execution of a will may have interest in the property.
  9. Title transferred by an heir may be subject to a federal estate tax lien.
  10. An heir or other person presumed dead may appear and recover the property or an interest.
  11. A judgement regarding the title may be voidable because of some defect in the proceeding.
  12. By insuring the title, you can eliminate delays when passing your title on to someone else.
  13. Title insurance reimburses you for the amount of your covered loss.
  14. Title insurance helps speed negotiations when you’re ready to sell or obtain a loan.
  15. A deed or mortgage may be voidable if signed while the grantor was in bankruptcy.
  16. There may be a defect in the recording of a document upon which your title is dependent.
  17. Title insurance covers attorney fees and court costs.
  18. Many lawyers protect their clients as well as themselves by procuring title insurance.
  19. A title policy is paid in full by the first premium for as long as you own the property.
  20. Conveyances and proceedings affecting rights of military personnel protected by the Soldiers’ and Sailors’ Civil Relief Act.

Information for this article was made possible throught the courtesy of Equity Title Company

Anca Savelio

CalBRE Lic# 01999055 Cell: 858-205-0121

Allison James Estates and Homes