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Why Do You
Need Title Insurance?
Title Express,
Inc. is in business to make sure your
rights and interests to the property are
clear, that transfer of title takes
place efficiently and correctly, and
that your interests as a home buyer are
protected to the maximum degree.
Title Express,
Inc. routinely issues two types of
policies. An Owner's Policy covers you,
the home buyer, and a Lender's Policy
covers the bank, savings and loan, or
other lending institution over the life
of the loan. Both are issued at the time
of purchase.
Before issuing a
policy, however, Title Express, Inc.
performs an extensive search of the
public records to determine if anyone
other than the party selling the home
has an interest in the property. With
such a thorough examination of records,
any title problems usually can be found
and cleared up prior to your purchase of
the property.
The fact that
Title Express, Inc. works to eliminate
risks before they develop makes title
insurance much different than other
types of insurance you may have
purchased. Most forms of insurance
assume risks by providing financial
protection through a pooling of risks
for losses arising from an unforeseen
event, like a fire, theft or accident.
The philosophy of title insurance, on
the other hand, is to eliminate risks
and prevent losses caused by defects in
title that happened in the past. Risks
are examined and mitigated before
property changes hands.
This risk
elimination has benefits to both you,
the home buyer, and to us as the
insurer; it minimizes the chances
adverse claims might be raised, and by
so doing reduces the number of claims
that have to be defended or satisfied.
This keeps costs down for Title Express,
Inc. and your title premium low.
What is
Title Insurance?
The
purchase of a home is one of the most
expensive and important purchases you
will ever make. You and your mortgage
lender will want to make sure the
property is indeed yours and that no one
else has any lien, claim or encumbrance
on your property.
What is the
Difference Between Title Insurance and
Casualty Insurance?
Title insurers work to identify and
eliminate risk before issuing a title
insurance policy. Casualty insurers
assume risks. Casualty insurance
companies realize that a certain number
of losses will occur each year in a
given category (auto, fire, etc.). The
insurers collect premiums monthly or
annually from the policy holders to
establish reserve funds in order to pay
for expected losses. Title companies
work in a very different manner. Title
insurance will indemnify you against
loss under the terms of your policy, but
title companies work in advance of
issuing your policy to identify and
eliminate potential risks and therefore
prevent losses caused by title defects
that may have been created in the past.
Title insurance
also differs from casualty insurance in
that the greatest part of the title
insurance premium dollar goes towards
risk elimination. Title companies
maintain "title plants" which contain
information regarding property transfers
and liens reaching back many years.
Maintaining these title plants, along
with the searching and examining of
title, is where most of your premium
dollar goes.
Who
Needs Title Insurance?
Buyers
and lenders in real estate transactions
need title insurance. Both want to know
that the property they are involved with
is insured against certain title
defects. Title companies provide this
needed insurance coverage subject to the
terms of the policy. The seller, buyer
and lender all benefit from the
insurance provided by title companies.
What
Does Title Insurance Insure?
Title insurance offers protection
against claims resulting from various
defects (as set out in the policy) which
may exist in the title to a specific
parcel of real property, effective on
the issue date of the policy. For
example, a person might claim to have a
deed or lease giving them ownership or
the right to possess your property.
Another person could claim to hold an
easement giving them a right of access
across your land. Yet another person may
claim that they have a lien on your
property securing the repayment of a
debt. The property may be an empty lot
or it may hold a 50-story office tower.
Title companies work will all types of
real property.
What
Types of Policies are Available?
Title
companies routinely issue two types of
policies: An "owner's" policy which
insures you, the homebuyer, for as long
as you and your heirs own the home; and
a "lender's" policy which insures the
priority of the lender's security
interest over the claims that others may
have in the property.
What Protection Am I Obtaining With
My Title Policy?
A title insurance policy
contains provisions for the payment of
the legal fees in defense of a claim
against your property which is covered
under your policy. It also contains
provisions for indemnification against
losses which result from a covered
claim. A premium is paid at the close of
the transaction. There are no continuing
premiums due as there are with other
types of insurance.
What Are
My Chances of Ever Using My Title
Policy?
In
essence, by acquiring your policy, you
derive the important knowledge that
recorded matters have been searched and
examined so that title insurance
covering your property can be issued.
Because we are risk eliminators, the
probability of exercising your right to
make a claim is very low. However,
claims against your property may not be
valid, making the continuous protection
of the policy all the more important.
When a title company provides a legal
defense against claims covered by your
title insurance policy, the savings to
you for that legal defense alone will
greatly exceed the one-time premium.
What if I Am Buying
Property From Someone I Know?
You may
not know the owner as well as you think
you do. People undergo changes in their
personal lives that may affect title to
their property. People get divorced,
change their wills, engage in
transactions that limit the use of the
property, and have liens and judgments
placed against them personally for
various reasons.
There may also be matters affecting the
property that are not obvious or known,
even by the existing owner, which a
title search and examination seeks to
uncover as part of the process leading
up to the issuance of the title
insurance policy.
Just as you wouldn't make an investment
based on a phone call, you shouldn't buy
real property without assurances as to
your title. Title insurance provides
these assurances.
The process of risk-identification and
elimination performed by the title
companies, prior to the issuance of a
title policy, benefits all parties in
the property transaction. It minimizes
the chances that adverse claims might be
raised, and by doing so reduces the
number of claims that need to be
defended or satisfied. This process
keeps costs and expenses down for the
title company and maintains the
traditional low cost of title insurance. |
