Title Insurance "Title" is the right to own, possess, use, control, and dispose of property. When you buy a home, you are actually buying the seller's title to the home. A deed is the written legal evidence that the seller has conveyed his or her ownership rights to you. Prior to "closing" on a property, when the actual transfer of ownership occurs, an attorney or title specialist will conduct a title examination. The purpose of the title examination is to discover any problems that might prevent you from getting clear title to the home. Title problems can usually be cleared up however, in some cases, severe title problems can delay settlement, or even cause you to consider voiding your contract with the seller. What are some common title problems? Title problems, or "clouds" happen for various reasons. Here are a few examples of situations that can create a title problem: The home to be purchased was owned by the seller's parents, who intended to use it for their retirement. The seller's father died several years ago, and the mother just recently passed away. A title search reveals that the property is titled in the mother's name, but there is no will on file to indicate how she disposed of it.
You are buying a house to which an inground pool was added several years ago. The sellers of the home took out a home equity loan to pay for the pool. They have repaid the loan, but the lien was never removed from the title.
The seller of the house added central air conditioning several years ago. The seller and the contractor had a dispute over the workmanship, and the seller withheld the final payment on the contract. The contractor filed a mechanic's lien on the property, which has never been removed.
You are buying a house with a newly paved driveway. The seller of the house bought his neighbor's share of their shared driveway and converted it into a private driveway when the neighbor built a new driveway on the other side of his house. Unfortunately, ownership of the expanded driveway doesn't appear in the public records.
Some "clouds on title" can be corrected relatively easily, like most of the examples listed above, while others can become quite complicated to remove. Your Realtor and Title company will work together to keep you informed during the process of eliminating any defects in the title. If there is anything you don't understand, please be sure to ask questions. What is Title Insurance? Title insurance is the best way to protect yourself against title defects that have occurred in the past, which may not appear until after you've taken ownership of a property. Before a Title Insurance policy is issued, a title report is prepared based on a search of the public records. This report gives a description of the property, along with any title defects, liens, or encumbrances discovered in the course of the title search. Title insurance protects you against title defects that were not discovered in the course of the title search. Most Title Insurance companies offer different levels of coverage. A basic policy covers such risks as: - Forgery and impersonation;
- Lack of competency, capacity or legal authority of a party;
- Deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner);
- Undisclosed (but recorded) prior mortgage or lien;
- Undisclosed (but recorded) easement or use restriction;
- Erroneous or inadequate legal descriptions;
- Lack of a right of access; and
- Deed not properly recorded.
If such a defect were discovered later, your title insurance would cover you. When Title Insurance is ordered it is important to ask what is covered under the policy you choose. It is also important to ask questions for anything that you don't understand. Title Insurance is different than other types of insurance policies (auto, life, health) in that you pay a one-time fee and it protects against past events versus future events. How does title insurance protect you? If title problems are severe enough and not covered by insurance, you could actually lose your house. A title insurance policy protects you and your heirs against title defects for as long as you own the property. The policy represents the title insurance company's responsibility to compensate you for any covered loss caused by a defect in the title, or any lien or encumbrance that was not discovered in the title search. Most title insurance policies do have exceptions, however, so it is important to read and understand the policy. Be sure to call the title company if you have any questions about what is covered in your particular policy. 
Joddie Roberts,
Your Spokane Realtor
Exit Real Estate North
8524 N. Wall
Spokane, WA 99208
509.844.7344
www.spokaneagent.net ...serving REAL needs with REAL knowledge... 
 
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