Title Insurance FAQ

A title is the foundation of property ownership. It is the owner’s right to possess and use the property.

Because land is permanent and can have many owners over the years, various rights in land (such as mineral, air or utility rights) may have been acquired by others by the time you come into possession of it, even if the land has never before been built upon. So in order to transfer a clear title to a piece of land, it is first necessary to determine whether any rights are outstanding.

A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. 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 burdens on the property.

A title search can show a number of title defects and liens, as well as other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land.

Yes. There are some ‘hidden hazards’ that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his or her marital status, resulting in a possible claim by a legal spouse. Other ‘hidden hazards’ include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you’ve purchased your home and can jeopardize your right to ownership.

Title insurance is your policy of protection against loss if any of these problems – even a ‘hidden hazard’ – results in a claim against your ownership.

That depends on the claim. In an extreme case, you could lose your entire home and property – and still be liable to pay off the balance of your mortgage. Most claims aren’t that dramatic, but even the smallest claim can cost you time, money and aggravation, and you may have to pay costs for a legal defense.

If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense – and pay all court costs and related fees. Also, if the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.

Not necessarily. A deed is just a document by which the right of ownership in land is transferred, whatever that right may be. It’s not proof of ownership, and it doesn’t do away with rights others may have in the property. In addition, a deed won’t show you liens or claims that may be outstanding against the title.

Maybe – and maybe not. An abstract is a history of the property title as revealed by the public records. Abstracts may contain errors and do not disclose ‘hidden hazards’ that can threaten your property title if you do not have a title insurance policy.

An attorney’s opinion is based on a search of the public records. So, once again, even the most exhaustive search of these records may not reveal everything. Unlike a title insurance policy, the Shipley Law Firm & Title Company is not liable if you should suffer loss because of ‘hidden hazards’ in the title.

Because the owner could, in a very short time, do many things to encumber the title. For example, he could grant easements or construct improvements that encroach on adjacent property. It is necessary to conduct an up-to-date title search to uncover any such problems.

A title policy insuring the builder does not protect you. Also, a great many things could have happened to the land since the builder’s policy was issued. Liens, judgments and unpaid taxes for which prior owners were responsible may be disclosed after you purchase the property – causing you aggravation and costing you money.

Yes. Basically there are two different types of policies – a loan policy and an owner’s policy. The loan policy protects the lender’s interest in the property as security for the outstanding balance under the buyer’s investment or equity in the property up to the face amount of the policy. (Title insurers in many states offer increased policy coverage through inflation endorsements to cover increases in value due to inflation.)

Probably a lot less than you think. Charges vary in different sections of the country, but generally the cost of title insurance to about one percent or less of the cost of the property. And unlike other insurance premiums, which must be paid annually, a title insurance premium is paid one time only, usually at settlement.

For as long as you or your heirs retain an interest in the property and, in some cases, even beyond.

Any real estate attorney or licensed title insurance company operating in your state can issue title insurance as an agent for one or move title insurance underwriters. When choosing a title insurance agent (real estate attorney or licensed title insurance company), it is important that you look for expertise and experience, as well as the financial strength of the title insurance underwriter to protect you should a claim arise. The Shipley Law Firm & Title Company is an approved agent for Attorneys’ Title Insurance Fund, Inc. and  Commonwealth Land Title Insurance Company.