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Title Insurance
What is Title Insurance?
In the simplest terms, title insurance
is protection and comfort. A title insurance policy creates the
comfort of knowing that a party's interest, usually as owner or
lender, is protected in a real estate transaction.
Title insurance offers protection from
a number of risks that can arise in a real estate transaction. Any
of these risks, and many others, can put the owner's or lender's
interest in jeopardy or, at the very least, cause problems in
subsequent transactions:
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Clerical error (the most common
problem and generally the easiest to fix)
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Forgery, fraud, incompetency and
incapacity
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Lack of legal access to the property
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"Missing Links" in the chain of
title
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Unknown heirs to property due to
successions, improper identification of owners, etc.
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Surveyor errors
The two primary types of title
insurance policies are Mortgagee's and Owner's:
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Mortgagee's-This policy protects the
lender's interest in the property up to the amount of the loan; it
is almost always required by the lender. Every time a borrower
gets a new loan on a piece of property, a new policy must be
purchased. It protects that lender, as to that specific loan, and
will terminate when the loan is paid off. The one-time premium is
paid at the time of closing the loan.
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Owner's-Owner's title insurance
protects the owner against title defects, for as long as he owns
the property, up to the purchase price or value of the property.
The one-time premium is generally paid at the time of purchase of
the property; however, owner's coverage can be purchased at a
later date. When purchased at the same time as the Mortgagee's
policy, (Simultaneous Issue) it is considerably less expensive
than when purchased separately.
In addition to either of the above
policies is Lien Coverage (also known as M&M or Mechanics and
Materialman's Coverage) which provides additional insurance to an
owner or lender during the construction of a new home in the event
any liens are placed on the property for non-payment of labor or
materials during construction.
22 Reasons Why You May Need Title
Insurance:
1. Forgery
2. Fraud in connection with the execution of documents
3. Undue influence on a grantor or executor
4. False impersonation by those purporting to be owners of the
property
5. Incorrect representation of marital status
6. Undisclosed or missing heirs
7. Wills not properly proven in court
8. Mistaken interpretation of wills and trusts
9. Mental incompetence of present or prior owner/seller
10. Conveyance by a minor
11. Birth of heirs subsequent to the date of a will
12. Inadequate surveys
13. Incorrect legal description
14. Non-delivery of deeds
15. Unsatisfied claims not shown on the deed records
16. Deeds executed under expired or false powers of attorney
17. Confusion due to similar or identical names
18. Dower or courtesy rights of ex-spouses or former owners
19. Incorrect indexing by the court clerk
20. Clerical errors in recording legal documents
21. Delivery of deeds after the death of the owner
22. Undisclosed (but recorded) tax or materialman's lien
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