Title Insurance - What it is and why you need it.
Title insurance is a contract between the title underwriter (Insurer) and the insured (home owner) whereby the title underwriter (Insurer) agrees to indemnify the insured for all loss (up to the amount of the policy) and expenses which the insured (home owner) may suffer by reason of the title to real property being other than as represented in the title policy.
The coverage of the policy, like all policies of insurance, is subject to the conditions, exception and exclusions provided in the policy.
A title insurance policy is a guarantee against the possibility of loss if the attorney/closing agent makes an honest mistake. An attorney’s liability is restricted by his or her ability to pay and is usually time sensitive, while a title insurance company’s solvency is supervised and regulated by the state department of insurance and is not subject to any time limits.
A title insurance policy insures against loss for matters that even the most diligent search of the public records cannot detect. These are called “hidden defects.” There are at least 50 such defects, examples of which include
- Errors in Tax Records
- Missing Heirs
- Mistakes in Recording
- Un-probated Wills
- Deeds by Minors
- Duress of Execution of Deeds
- Unrecorded claim of lien for Estate and gift tax liens set aside by a bankruptcy court
- Payment of labor or materials judgement for improvements done on premises
- And More
A title insurance policy provides for a defense against any claim against the title as insured, whether or not the claim has validity. Litigation costs money, and with title insurance the insurer bears the cost.
A title insurance policy provides coverage even after the property is sold as long as the policyholder has liability on warranties on title given a general warranty deed.
Information provided by H&S Title and Escrow, Inc, deemed accurate but not guaranteed.
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