Frequently Asked Questions

Buying a home is, for many of us, the biggest single investment we’ll ever make. Knowing this, most homeowners provide for the security and safekeeping of their homes by insuring them against hazards such as fire, theft and weather damage.

But there is another hazard that can pose an even greater risk to homeownership: defect in the title to your property can cause you to lose part or all of your investment in your home.

Fortunately, there is a way to protect your investment from these title defects. It comes in the form of title insurance.

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Title Insurance

What is title?
Why is transferring the title to real estate different from transferring the title to other items, such as a car?
What is a title search?
What kinds of problems can a title search reveal?
Are there any problems that a title search cannot reveal?
What is title insurance?
How much could I lose if a claim is filed against my property?
How does title insurance protect my investment if a claim should arise?
The owner of the property has a deed. Isn’t that proof of ownership?
Are there different types of title insurance?
How much does title insurance cost?
How long does my coverage last?

Title Insurance

What is title?

A title is the foundation of property ownership. It is the owner’s right to possess and use the property.

Why is transferring the title to real estate different from transferring the title to other items, such as a car?

Because land is permanent and can have many owners over the years, various rights in land may have been acquired by others (such as mineral, air or utility rights) by the time you come into possession of it, even if the land has never before been built upon. So in order to transfer a clear title to a piece of land, it is first necessary to determine whether any rights are outstanding.

What is a title search?

A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. The purpose of the search is to verify the seller’s right to transfer ownership, and to discover any claims, defects and other rights or burdens on the property.

What kinds of problems can a title search reveal?

A title search can show a number of title defects and liens, as well as other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land.

Are there any problems that a title search cannot reveal?

Yes. There are some “hidden hazards” that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his marital status, resulting in a possible claim by his legal spouse. Other “hidden hazards” include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you’ve purchased your home and can jeopardize your right to ownership.

What is title insurance?

Title insurance is your policy of protection against loss if any of these problems – even a “hidden hazard” – results in a claim against your ownership.

How much could I lose if a claim is filed against my property?

That depends on the claim. In an extreme case, you could lose your entire home and property – and still be liable to pay off the balance of your mortgage. Most claims aren’t that dramatic, but even the smallest claim can cost you time, money and aggravation, and you may have to pay costs for a legal defense.

How does title insurance protect my investment if a claim should arise?

If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense – and pay all court costs and related fees. Also, if the claim proves valid, you will be reimbursed for your actual loss up to the face amount of the policy.

The owner of the property has a deed. Isn’t that proof of ownership?

Not necessarily. A deed is just a document by which the right of ownership in land is transferred, whatever that might may be. It’s not proof of ownership, and it doesn’t do away with rights others may have in the property. In addition, a deed won’t show you liens or claims that may be outstanding against the title.

Are there different types of title insurance?

Yes. Basically there are two different types of policies – a loan policy and an owner’s policy. The loan policy protects the lender’s interest in the property as security for the outstanding balance under the buyer’s mortgage. The owner’s policy safeguards the buyer’s investment or equity in the property up to the face amount of the policy.

How much does title insurance cost?

Probably a lot less than you think. Charges vary in different sections of the country, but generally the cost of title insurance (including search, examination and related services) amounts to about one percent, or less, of the cost of the property. And unlike other insurance premiums, which must be paid annually, a title insurance premium, is paid one time only, usually at settlement.

How long does my coverage last?

For as long as you or your heirs retain an interest in the property and, in some cases, even beyond.

Disclaimer

This information is a product of Commonwealth – A LandAmerica Company. This information is intended for informational purposes only. Your title insurance policy contains terms and conditions that may limit or restrict coverage. Consult your attorney for specific advice regarding your legal rights, and consult your real estate professional when selling or purchasing a home