What is a Title Insurance and Why is it needed?
Title Insurance
Title insurance policy is one of the required key elements in any real estate transaction. I have gathered a lot of information about this and publishing them as series of articles (blogs), due to size, to answer basic questions such as:
What is a title policy and why is needed?
How many types of title policies are there?
What searches title companies conduct and how?
What title policy covers and for how much?
What is a Title Commitment?
How much a title policy cost?
What is the Difference between a Title Insurance and Property Insurance?
Who selects the title company (seller or the buyer)?
What is a Title Insurance and Why is it needed?
Title insurance helps provide home buyers and/or mortgage lenders protection against losses resulting from unknown defects in the title to your property that existed before the closing of a real estate transaction.
Those unknown "deficits" could be:
Outstanding liens on the property (e.g., unpaid real estate taxes by a prior owner).
Encumbrances (anything that might hinder the owner's right of ownership; e.g., errors or omissions in deeds, undisclosed errors, fraud, forgery, mistakes in examining records).
Title companies search the public records to determine if there are title problems that must be resolved before they purchase a property. Title companies’ technical experts are trained to identify the rights others may have in your property, such as recorded liens, legal actions, disputed interests, rights of way, or other encumbrances on your title. Before closing your transaction, the title company will proceed to "clear" those encumbrances, which you do not wish to assume.
When everything is "clear" of encumbrances, the Title Company issues Title Insurance Policies for Homeowner and Lender to protect their interests.
How Many Types of Title Insurance Policies are there?
When there is a mortgage involved in a real estate transaction, two types of Title Insurance must be obtained.
1.Owner’s Policy
2.Lender’s Policy
To get more detail information about these two policies, please see:http://www.TexasFiveStarRealty.com/Types_of_Title_Insurance_Policies.asp
What does Title Search Cover?
Examples of searches are: chain-of-title, reconveyances, easements, CC&Rs, other elements affecting title to the property.
For more detail information about what title search covers and how searches are done, please see (due to the size of document):http://www.TexasFiveStarRealty.com/What_does_Title_Search_Cover.asp
What is Title Commitment?
To get more detail information about schedules A, B, C and D on a Title Commitment, please see:http://www.TexasFiveStarRealty.com/WHAT_ARE_THE_SCHEDULES_ON_A_TITLE COMMITMENT.asp How Much Title Insurance Cost?
At least in state of Texas, the rate for Title insurance is regulated and is the same for all title companies. The rate has direct relation with the purchase price and the mortgage amount. Title insurance involves a one-time premium with the same rate for everybody, paid when you close the real estate transaction.
For state of Texas, Owner’s Title Policy cost about $630 for each $100,000 Purchase price.
What is the Difference between a Title Insurance and Property Insurance?
To get more detail information about this subject, please see:http://www.TexasFiveStarRealty.com/Difference_Between_Title_Insurance_and_Property_Insurance.asp
Who selects the title company (seller or the buyer)?
To get more detail information about who selects the title company (seller or the buyer)? please see: http://www.TexasFiveStarRealty.com/Who_Selects_Title_Compamy.asp
