ABOUT TITLE INSURANCE
A TITLE INSURANCE POLICY is a guarantee by a title company that a thorough investigation of the title to the property has been conducted , and that you have been notified of any outstanding claims to the property .
The title insurance company reports any defects in the title in the form of a title commitment so that these matters can be corrected . It is important you know of all the claims on the property and have them resolved and declared away prior to you taking title to the property .
The title commitment will carefully detail what items of encumbrance are not covered by the policy . You can then either get these items resolved or bow out of the transaction .
TITLE INSURANCE is issued by the title company when they are certain the property is free from all liens , encumbrances , and interests , and the insurance guarantees this . This is done so the title can be legally transferred to the buyer to be used as security for the lender ’ s funds . This is why the lender requires title insurance . Your lender has an interest in knowing you and the lender are the only parties with claims to the property .
The title insurance company thoroughly searches the public records to uncover any unpaid taxes , mortgages , judgments against previous owners , easements and other court actions or recorded documents which can affect title to the real estate .
Title insurance covers matters that occurred before the policy ’ s effective date , but were discovered later . Your policy will detail what is covered , what is not covered and the effective date .
WHEN TITLE INSURANCE IS ISSUED the title insurance company accepts the responsibility for any and all claims on the property prior to your purchase if they do not find the claim or call it to your attention prior to your purchase of the property . That responsibility includes defending your title in court if necessary ( at their expense ) or bearing the cost of settling the claim ( if it proves to be valid ) in order to protect your title and keep you in possession of your property .
12 | THE BUYER ’ S EDGE | A GUIDE TO PURCHASING A HOME