Buying any kind of real estate could very well represent the largest single investment a person ever makes. And real estate, like every other thing of value, is worth protecting.
A policy of Title Insurance is a contract of indemnity between the insured and the insuring company relating to the title to the land described in the policy, protecting the insured against loss of damage by reason of defects, liens or encumbrances of the insured title existing at the date of the Policy and not expressly excepted from its coverage .
The Policy is issued after a complete search and examination of the public records and shows the condition of the record title, including any money obligations outstanding against the property, easements and other matters which may affect the rights of ownership, possession and use of the property.
Title Insurance insures that the “record” title, is good subject only to the exceptions expressly set out in the Policy. It also insures against certain matters which do not appear of record, such as forgery, identity of parties, incompetence of former owners, interest of missing heirs, and status of individuals not having the “right” to sell property.
Types of Title Insurance
- Owners Policies are issued to real estate owners.
- Purchasers Policies are issued to purchasers of real estate under contract.
- Mortgage Policies are issued to mortgage lenders.
In addition there are several other special forms of policies. There is a type of policy to meet the requirements of almost any form of real estate transaction.
Exceptions to Title Insurance Coverage
The standard owners policy and standard mortgage policy are based on public records of the recording district in which the land is located.
- It does not insure against matters which would only be disclosed by actual inspection or survey of the property.
- It does not insure against certain matters not shown by the public records such as unrecorded easements, liens or money obligations.
- It does not insure against unrecorded utility rights of way, public or private roads, community driveways and other types of encumbrances.
- It does not insure against the rights or claims of persons in possession of the property which are not shown by the public records.
The list above is not inclusive and there are other risks/exceptions to the Title Insurance. You are encouraged to discuss the exceptions to the Title Insurance with your Title Officer and discuss possible solutions to gain more coverage.
Upon application for Title Insurance, the issuing company may specially cover matters which are disclosed by a physical inspection and/or a survey of the property, subject to any exceptions which the inspection will determine to be proper. An additional risk premium is charged for this type of coverage. Insurance of this kind is called ‘extended coverage’.
Most Title Companies will require that the Sellers and Buyers complete a “Statement of Identity” form which requests personal information such as former names used by the parties involved, previous address’, etc. This enables the Title Examiner to complete a thorough search of public records.
In addition, you can sometimes gain additional coverage regarding easements, etc. if a new survey is provided to the Title Company. These are the tips being issues by popular Australian Based Real Estate Investor and Real Wealth Australia director, Helen Connie Collier-Kogtevs. You can read more on Real Wealth Australia Reviews on their official website.
When are Title Policies Issued?
An owner’s policy protects only the owner while a Mortgage policy protects only the holder of the mortgage on the property. Separate policies are required to protect both interests. Special rates are available when both Owner’s and Mortgage policies are applied at the same time.
- The Owners Policy of title insurance usually is issued after the deed to the buyer is ‘delivered’ and recorded.
- A Purchasers Policy is usually issued after the contract has been executed by both parties or after the signed contract has been recorded.
- The mortgage policy of title insurance is usually issued after the mortgage or deed of trust has been properly executed and recorded.
Reissue of Title Insurance
The coverage of your policy is against all matters that appeared of record up to the date of issuance of your policy.
Since that time many documents may have been recorded, some of which may affect the title to your land. Taxes and assessments may have accrued and be unpaid. There may have been actions in court affecting your title.
The purchaser is entitled to have full information and protection as to the condition of the title right up to the date of his purchase. In addition, there may be matters of record which would prevent either the seller or buyer from selling, buying, or mortgaging land until such matters have been cleared. These items include such things as federal tax liens, judgments, incompetencies, divorce actions and other conditions which the title search may disclose.
Determining Title Policy Premiums
Title Insurance Premiums are determined by the amount and type of coverage provided. Unlike other insurance premiums, however, the title insurance premium is paid only once as the policy is effective for so long as title or “ownership’ remains in the name of the insured, or his heirs or devises. Rates are filed with the insurance commissioner who regulates the activities of title insurers.