Why Purchase Title Insurance ?

Homeowners and business buy title insurance to transfer risk of loss from themselves to the insurance company.

The title insurance company accepts the risk in return for a premium. In the title insurance industry, underwriting is the process used by insurance companies to determine whom to insure and what problems to solve.

The loan policy protects the lender against loss due to unknown title defects, as well as the lender’s interest from matters which may exist, but may not be known at the time of closing. This policy does not protect the borrower.

The real estate purchaser needs to buy an owner’s policy, which can be issued at the same time as the loan policy, for a one-time fee. The danger of loss if the lender has title insurance protection and the owner does not, is that the purchaser’s equity is at risk. The title insurance company would pay the lender’s loss not he owners.

Title insurance is issued after an extensive examination of the public records. Title problems may exist that cannot be discovered in a search. Common hidden risks that can cause loss of title are forged documents, mistakes in recording documents, misinterpretation of wills, unpaid mortgages, frauds etc. Title insurance companies will clear up problems or pay the insured’s losses.

The owner’s policy will remain in effect as long as the owner retain an interest in the property. The owner’s title insurance issued simultaneously with the loan policy is the best value a property owner can get.

If there is no change in ownership, in the case of refinancing a separate policy is needed for the lender, insuring the validity of the new mortgage when it is made. When a second mortgage is taken out the lender’s policy insures against all matters other then the first mortgage.

AMERICAN LAND TITLE ASSOCIATION

TITLE INSURANCE

A COMPREHENSIVE OVERVIEW

1. Title Insurance Overview
2. History of Title Insurance
3. Types of Title Insurance
4. Costs of Title Insurance
5. The Search Process
6. Benefiting Parties
• A. Buyers
• B. Sellers
• C. Lenders
• D. Brokers
• E. Attorneys
• F. Homebuilders
7. Secondary Mortgage Market
8. Regulatory Environment
• A. State vs. Federal Governance
• B. Monoline Insurance
• C. RESPA Reform
9. ALTA Uniform Policies