YOU ASK:

What is a title insurance policy and what can it do for me?

WE ANSWER:

Title insurance is an insurance product that pays for losses due to problems with the title. It covers the past issues that result in your property ownership being placed in jeopardy.

This means that the insurance company will pay in the event that you suffer physical or monetary loss because your ownership to the property is being contested. The insurance will also pay for the legal defense costs that you may incur as you defend yourself from such claims.

It is important to have title insurance, because a title (especially one that has passed on to many owners) may have problems that you are not aware of. Human error, recording mistakes, acts of fraud and forgery and even state law and legal judgments may cause problems with your title.

When you buy title insurance, what the insurance company will do first is do a title search. This involves looking at deeds and public documents to see and ensure that each transfer of ownership was proper and legal. It looks over how the property was subdivided and whether access to the property is allowed. The title search will start from the most recent deed and work his way farther down to the past owners. This is called establishing the chain-of-title.

The title search will also check to see if there are restrictive covenants, as well as encumbrances and judgments. Basically, the title search will check to see whether there is a clear title to the property.

And then, when the insurance policy is issued, it will protect against:

  • Acts of fraud and forgery
  • Incorrect signatures used on legal documents
  • Mistakes in recording or describing the property (also includes wrong property address)

The benefit of title insurance policy is that it assures you that you own the property fair and square, but that in the event that someone tries to claim it and you lose out on that claim, you will still be paid for the value of the property. Also, other losses involved will also be covered by the insurance.

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