A home is usually the largest single investment any of us will ever make. Title insurance protects against loss of value from hazards and defects that may exist in the title. These hazards include fraud, forged signatures on deeds, unknown property heirs, liens, and documentation errors.
The home buyer often questions whether title insurance is really necessary, particularly when an examination of the title has been completed by an experienced title examiner or real estate attorney, and the examination of all available title records shows no adverse information which question the marketability of the title. However, does an examination of title records necessarily remove all concern for title problems eventually surfacing? The answer is a big NO!
Hidden risks (e.i., problems with the title troubles which are not disclosed), even by the most diligent search of public records, are the most dangerous. These hidden risks can make your title worthless! Your attorney's examination may be the finest that skill, experience and legal knowledge that money can buy. but your title may be fatally defective. This is why Title Insurance exists, and why it plays such a basic role in protecting the real estate interests and equity of policy holders. If you were uninsured and your right to title is challenged, you stand to lose significant money defending yourself, and you could still lose your home.
Here are some title troubles that frequently occur. You may not discover them when you buy real estate, but months or years later, they can result in the loss of your property or an expensive lawsuit.
- Deeds by persons of unsound mind
- Deeds to or from defunct corporations
- Defective acknowledgments
- Duress in execution of instruments
- Erroneous reports furnished by tax officials
- False personation of the true owner of land
- Forged documents, i.e., deeds, releases, etc.
- Misrepresentation of wills
- Mistakes in recording legal documents
- Surviving children omitted from a will
- Errors in indexing
- Capacity of foreign fiduciaries
- Birth or adoption of children after date of will
- Deeds delivered after death of grantor/grantee, without consent of grantor
- Marital rights of spouse purportedly, but not legally, divorced
- Undisclosed divorce of spouse who conveys as consort's heir
- Deeds from a bigamous couple
- Deeds by minors
- Deeds in lieu of foreclosure given under duress
- Deeds by persons supposedly single, but married
- Administration of estate of persons absent but not deceased.
- Inadequate descriptions on conveyances
- Claims of creditors against property sold by heirs or divisees
- Easements by prescription not discovered by a survey
- Federal condemnation without filing of notice
- Deed of community property recited to be separate property
- Falsification of records
- Undisclosed or missing heirs
- Instruments executed under fabricated or expired Power of Attorney
Two Kinds of Policies. It is important for the buyer to know that there are two kinds of title insurance.
- Lender's Title Insurance. Usually paid for by the Buyer, Lender's Title Insurance protects the interest of the LENDER only. Lenders, knowing the many things that can snarl title to real property usually, and rightly, insist upon Lenders Title Insurance to protect their stockholders and/or investors.
- Owner's Title Insurance. Usually paid for by the Seller, Owner's Title Insurance protects the interests of the BUYER against loss due to any defect of the title, not excepted to or excluded from the policy.
Both kinds of title insurance are available in most areas in a single, low cost "package" that protects both Lender and Buyer for as long as they or their heirs have any interest in the property. The title insurer, without expense to you, will defend you against insured claim upon the title to your property. The one-time premium is small price to pay for the peace of mind and great protection the title insurance provides.
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