When a piece of real property is financed, purchased, or sold, a record of that transaction is generally filed in public archives. Likewise, other events that may affect the ownership of a property are documented and filed. These may include liens, levies, encumbrances, etc. When a buyer purchases title insurance , the title company searches these records to find(and remedy, if possible) issues that may affect the purchasers ownership.
Title Search and Exam
That’s where title insurance differs from traditional insurance models. When you purchase a policy insuring you for matters relating to your car or health, the insurance company asses the risk of insuring you, and bases its premium on the risk being assumed. With title insurance, the insurer first works to identify the status of ownership, liens and other matters affecting title by collecting documents affecting title by the public records that are statutorily identified for the recording of real estate transactions. The process is called the search. Once the search is complete, the title insurance underwriter can then determine the insurability of the title and list exceptions from coverage and requirements to insure.
When you purchase a new home or other piece of real property by securing a mortgage, you will be required by your lender to purchase a loan policy of title insurance. The policy insures the lender against covered title defects up to the amount of insurance. The coverage in favor of the lender lasts for the life of the loan under limited circumstances stated within the policy.
You will also have the option of purchasing an owner’s policy of title insurance, which provides insurance directly to the insured owner listed in the policy, and describes the type of real property interest owned. The insurance in both an owner’s and loan policy is subject to the policy provisions ,which include the covered risks, exclusions from coverage, the conditions and the exceptions to title listed on a schedule to the policy.
You will pay a one time premium for both the loan policy and owners policy at the close of your transaction, based on the total value of your home and the amount of your loan. This is another way in which title insurance differs from other insurance models, where premiums are paid on an ongoing basis. The purchase of a home or other real estate may be the largest financial invest you ever make. Title insurance can give you added piece of mind in knowing that the title to your investment is insured.
Featured from ‘An independent Policy-Issuing Agent of First American Title Insurance Company’
Provided by Kim Fullwood at OmniLand Settlements Corp
For further information contact [email protected]