What is a title?
A title is the foundation of property ownership. It is the owner's right to
possess, use and transfer the property.
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What does a title company do? |
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Think of a title company as the final stop on the road to a real estate or refinancing settlement. We oversee the interests of all parties — buyers, sellers, lenders, real estate agents — and coordinate the transfer of money and property at the time of closing. Prior to settlement the title company will research the ownership history of the property (title examination) to determine that the title is free of any liens or claims. At the settlement table, the title company collects and distributes funds from the transaction, transfers ownership of the property, and issues title insurance. |
What is title insurance?
Title insurance protects you, the property owner, and the lending institution
that holds your mortgage from unforeseen claims that may arise against your
property. The policy provides protection from financial loss and payment of
legal costs associated with such claims.
How does title insurance protect my investment if a claim should
arise?
If a claim is made against your property, title insurance, in accordance with
the policy, will assure your legal defense, including paying court costs and
related fees. If the claim proves valid, you will be reimbursed for your actual
loss up to the face amount of the policy. *See Below
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Do title companies charge different rates for title insurance? |
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Title insurance rates are set by state insurance commissions and are based on the purchase price of your property (owner's policy) and the loan amount (lender's policy). |
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I keep hearing about settlement costs. Besides paying for title insurance, what other fees will the title company charge? |
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You will probably be asked to pay for the title examination, as well as fees for handling the settlement and document preparation, as well as out of pocket expenses. |
What is pro-ration of property taxes?
This is the process of charging either the buyer or seller for their share of
real estate taxes owed on the property for their respective time of ownership.
Taxes are said to be "pro-rated" back or forward to the due date of the property
taxes.
*Your title insurance policy protects you from additional hazards which may not be revealed in the records:
| • | Marital status of owner incorrectly given |
| • | Deeds, wills, and trusts that contain improper vesting and incorrect names |
| • | Transfer of property by a mental incompetent or minor |
| • | Property line disagreement (i.e. a neighbor builds a fence over your property line) |
| • | Confusion due to similar or identical names |
| • | Outstanding mortgages, judgments, and tax liens |
| • | Easements |
| • | Incorrect notary acknowledgments |
| • | A forged deed that transfers no title to real estate |
| • | Previously undisclosed heirs with claims against the property |
| • | Instruments executed under expired or fabricated power of attorney |
| • | Mistakes in the public records |
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Under the terms of a title insurance policy, you are protected against risks and insured against loss by provision of legal counsel to defend your rights under the policy, or by being reimbursed for any loss sustained. The original premium is your only cost as long as you or your heirs own the property. You really can't afford not to be protected!
When you buy an ordinary article like a coat, a television or
a watch, you do not need to know whether the former owner is married, single or
divorced. You may buy a share of stock or a bond without being concerned whether
the seller has a tax bill due. You may buy another person's car without being
concerned whether there are any suits or judgment against the person. But when
you buy a condominium, a house, any other type of building to even vacant land,
it is vital to know all of these things — and many others, too. You must have a
complete investigation made on every point or you may discover that the property
you bought and paid for is not actually yours at all. And even after the
investigation, you will need protection in the event that some point has been
missed in the public records or someone makes a claim on the title to your
property. This is the protection afforded by a title insurance policy.
Many special laws have been enacted for the protection of real estate — laws so
strict and far-reaching that real estate is more strongly safeguarded than any
other form of property. As a result, the owner of land has exceedingly strong
rights, as do the family and heirs of the owner. Others have "rights" in the
property, as well: mortgagers and leasehold rights, liens for unpaid taxes or
others to whom the owner owes money, mining, oil or air rights, etc. Any who has
such a claim is, in a limited way, a part owner and can only be deprived of
their interest through settlement or release of the claim. The claim is still
valid even if the property is sold without their knowledge. As a new owner, you
may know nothing about these risks, but you are still vulnerable to such claims
on your property. You need title insurance to protect you.
© 2004. WorldWide Title Group,
LLC. All Rights Reserved.
