YOU ASK:

How to check a deed (land title), and how title insurance works?

WE ANSWER:

When you check a deed (also known as doing a title search), you look at public records to learn about the deed and to see if there are liens or outstanding accounts that are attached to it. You also follow the line of the title, investigating how it changed hands from one owner to another to determine whether each transfer of ownership was done properly.

This is so that no one will come up later on and say that he has a claim to the property, since it was illegally sold or transferred to the new owner's name. Thus, a title search will also check that each person who is an owner of the property has duly signed off during the closing of the transaction.

Doing a Title Search

Doing a title search can be complicated and tedious and it would be best to hire a professional who is more well versed in looking at public documents and ferreting out hidden flaws or defects in the policy. If a professional or an employee of a title insurance company does the search, he will also issue a title opinion, which reflects his professional opinion about the status of the title.

The title searcher should also look to see other technical details of the property, such as whether there is access to the property and whether there is a potential that the properties values will diminish considerably.

He will check to see if that parcel of land is landlocked, since there are no easements that will take you the nearest road.

How Title Insurance Works

Title insurance works by protecting the insured against potential losses caused by the defects in the policy. When you hire a title company to do a search and to issue title insurance, it will issue a certificate or title commitment, then it will issue a title policy to protect your interest in the property.

When there is a problem where the cause is covered by the policy, the insurance company will pay either for legal fees as you defend your ownership of the property, or it will pay you for the loss of value due to any title defect. (For example, the value of your land will be considerably affected if it is discovered that it has no points of access to it.) It will also indemnify you for the covered amount in the event that you lose your title.

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