Frequently Asked Questions
What is Title Insurance?
Title Insurance legally protects the lender or the buyer against loss arising from disputes over ownership of a property. Title Insurance guarantees that a presumed owner of a house is in fact the owner with the right to sell, mortgage or otherwise enter into legal agreements that affect his or her property.
HOW MUCH DOES TITLE INSURANCE COST?
Prices, and the way title insurance is issued, vary from state to state. On a typical $500,000 to $1,000,000 refinance loan, lender’s title insurance costs approximately $1,700-$2,900.
What are those costs for?
Title insurance costs go toward searching, examining and maintaining title records, resolving or clearing title defects, attorneys’ fees and other costs associated with defending a lender or property owner against title-related issues, and the payment of actual claims.
What does the policy cover?
A title insurance policy protects against hidden risks that a title search cannot uncover, as well as the legal fees in defending title. Some examples of defects in title are:
Fraud. False claims of ownership, forged deeds, wills, signatures, conveyances, instruments, false representations, false records of all sorts, illegal acts of trustees, guardians, administrators and attorneys.
Human Error. Errors in copying, indexing, recording and undisclosed easements; errors by administrators, executors, trustees, guardians, and attorneys; destruction of records.
Improper Deeds and Wills. Deeds by persons of unsound mind, minors, deeds delivered after death of without the grantor's consent; invalid, suppressed erroneous wills, missing heirs, unsettled estates and/or ex-spouses.
Liens and Other Rights. Liens for unpaid estate, income and property taxes, mechanic's liens; unpaid mortgages; irregular court proceedings, defective foreclosures; sewer and water assessments.
What does a title search entail?
A title search includes examining records in the offices of recorders or registers of deeds, clerks of courts and other municipal and county officials, or similar records housed in a title company’s “title plant”. These records cover all recorded documents, judgments, other liens, general taxes, street easements, sewer assessments, special taxes and levies, and other matters. This review of records provides advance warning so problems can be eliminated whenever possible.
In addition to matters shown by public records, other title problems may exist that cannot be discovered in a search. Examples include a forged deed that transfers no real title to real estate, a claim against a property by a previously undisclosed heir or a former owner, an honest mistake in determining the status of the title, and many other undisclosed title defects. So title insurance is highly recommended to protect against these unforeseen problems.
What happens if there is a claim?
Title Insurance is the vehicle through which real estate transactions are completed with protection from legal and financial claims of others and assures that any claim will be defended and if warranted, paid. There are multitudes of title problems that could occur from human error to outright fraud. Fortunately, there is a universally accepted means of dealing with title issues.
How much value does Title Insurance add to the marketplace?
Title Insurance is a significant part of the economic well-being of the marketplace. The fuel that sustains the refinance engine is the buying and selling of mortgages on the open market. That market, along with government-sponsored entities such as Fannie Mae and Freddie Mac, provides liquidity for the real estate finance industry. Title Insurance enables lenders to convert long-term assets into cash, which can be reinvested into new mortgages.
There are tens of millions of mortgages outstanding totaling trillions of dollars. These mortgages can be safely traded, invested and reinvested again because Title Insurance offers a secure and reliable protection against claims of others or outright defects in ownership or undisclosed liens. With a Title Insurance policy in place, an investor is freed from these concerns and the transfer of interest is easily completed.
Who benefits from Title Insurance?
Title Insurance, in one form or another, has been in existence for well over 100 years. Title Insurance protects homeowners and lenders alike. Title Insurance facilitates the easy transfer of ownership interests and provides assurance in the mortgage transfer industry. Title Insurance holds all components of the real estate transaction firmly together in an industry that is socially significant and economically substantial.
Courtesy: American Land Title Association and New York Land Title Association.