YOU ASK:

Is my real estate purchase protected with title insurance?

WE ANSWER:

Yes, your purchase is protected with title insurance. However, the title insurance will only cover past problems related to the title and will not pay for any future issues or problems.

Before the underwriter will issue the title insurance policy, it will do a title search and examine the pertinent details of the policy: Who is the owner? Are there any encumbrances or liens that should be settled? Are there any back taxes owed?

In essence, the underwriter will study the chain of title - starting from the current owner and moving back to the previous owners and whether the ownership can be legally transferred from the previous owners to the buyer.

After the title underwriter has studied the public documents, it will provide the insured with a certificate that contains its professional opinion about the status of the policy. If the underwriter finds some discrepancies in the title, it will note this down as a cloud on the title. The title company will state the conditions upon which they will issue the policy. Normally, the title company will first require that the clouds found in the title be cleared before the policy is issued.

Then, the title insurance is issued. The title insurance will protect your real estate purchase against:

  • Fraud or forgery
  • Claims related to the cloud/s on the title
  • Expenses related to ensuring a clear title to the property
  • Judgments and encumbrances
  • Incorrect signatures, property description or important items on the legal documents
  • Mistakes in related records and legal documents

If you buy extended owner's coverage, this will protect your real estate against:

  • Improper subdivision/subdivision maps
  • Violations made by previous owners on the building permit, zoning and other related permits
  • Living trusts
  • Violations made by previous owners on covenants
  • Bankruptcy filed by the contractor
  • Various kinds of forgeries and encroachments after the title insurance has been issued
  • Structural damage on the property due to mineral extractions or mining
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