What Is Title Insurance

There are two main risks categories that title insurance applies the principals of insurance to which are present in all real estate transactions.

1. Hidden hazards –forgery, incompetence of grantor or mortgagor, unknown heirs, fraud, impersonations etc.
2. Human Error – lets face it, everyone is human and on occasion mistakes are made.

Title Insurance differs from other types of insurance by protecting against future losses arising out of events that have happened in the past. There are no annual premiums. A single premium, based on the amount of the sale and/or mortgage is paid when the policy is issued and is good for the life of the policy. A lenders policy insuring the lender stays in effect until that lenders loan is paid off. An owners policy is good as long as the owner or the owners heirs owns the property.

The Preliminary title report

The title company will do a search and examine public records to investigate information surrounding title to the property. This search creates a title report which is provided to the parties to the escrow before closing. It will tell you….

Who the legal owner is.

Existing easements, restrictions, rights of way or other rights granted to others.
Property tax status and any other public or private assessments. It will show any unsatisfied mortgages, judgments, or liens that must be satisfied before clear title can be conveyed. The degree of ownership being sold is currently and accurately vested in the seller.