FAQ
FAQ
Title search and insurance are critical parts of any real estate transaction, whether residential or commercial. In most cases, the work done by a title company happens behind the scenes, which can make it seem like a mystery to some. In fact, “why do I have to pay for title search?” and “why do I need title insurance?” are two of the most common questions we hear!
If those questions are on your mind, you’ve come to the right place: we’ve rounded up some of the most frequently asked questions in our industry and answered them for you below.
Keep in mind that title rates, laws, and customs vary based on location. If you have more specific questions related to where you live, consult your realtor and/or attorney.
Demystifying Title Insurance
Ensuring You're Protected When a Clean Title Search Falls Short
- Clerical Errors: Public record databases and documents aren’t immune to human error. A small mistake in documentation or recording could trigger complications for property owners. Title insurance can help cover legal and correction costs in cases where clerical errors arise.
- Unknown Heirs: In some cases, unknown heirs or distant relatives of previous owners can come forward after the sale, claiming inheritance rights. They may contest your ownership, which can become a costly and complex issue to resolve. Title insurance provides protection, so if a valid claim arises, your ownership is covered
- Forgery or Fraud: Past fraudulent activity, such as forged documents or signatures, can create valid claims on a property. If a deed, mortgage, or other document in the property’s chain of title has been tampered with, you could face legal challenges. Title insurance provides the legal defense and financial coverage needed if fraud impacts your property rights.
- Undisclosed Easements or Covenants: Easements grant others the right to use a part of your property, often for utilities, roads, or access. These agreements are not always disclosed during a title search but could limit how you use the property. Title insurance can provide compensation if an undisclosed easement affects your enjoyment or use of the property.
Understanding the Two Types of Insurance Coverage
- Owner’s Policy
This policy protects your rights as the homeowner for as long as you or your heirs have an interest in the property.
Both title insurance policies not only pay valid claims and legal fees to defend against hidden title issues, but also help to decrease ownership risks by providing a thorough title search prior to the issuance of either policy.
- Lender’s Policy
This policy protects the bank or other lending institution for as long as they maintain an interest in the property (typically until your mortgage is paid off).
Key Elements Included in the Title Search
- Mortgage information
- Street and sewer assessments
- Liens
- Taxes and levies
- Easements, judgments, and other court proceedings
- Boundary issues
