Title Insurance FAQ’s
Why Do I Need Title Insurance?
Real Estate has such great value that many special laws have been enacted to protect the owner of the property and the heirs of the owner. Also many others may have rights in the property such as Mortgage and Lien Holders, Municipalities for Tax Liens, the United States for Federal Tax Liens and the others for Minerals, Oil or Air Rights. Because of these rights and the bundle of laws protecting the owners, and others that have an interest in the property, the purchase of real property must be done carefully and only after an extensive investigation of the title. Even after an extensive investigation, the only protection against such things as: errors on the record, missing heirs, mental incompetence of the seller, marital status, etc. etc. etc., is by the purchase of a Title Insurance Policy.
The following are some of the issues that must be addressed when purchasing real property:
- The continuous record of all owners to the property must be searched. This is called a “Chain of Title”. If there is any break in the “Chain of Title”, the title you obtain may be defective.
- Law suits, judgments and liens against former owners may be a claim against the property, and if not discovered during the search of the title, may have to be paid by you in order to clear the title.
- Unpaid real estate taxes are a first lien on real property and if not paid may result in the loss of your title to the premises.
- Have any former owners granted rights to others? Rights such as easements for a driveway or power line, any right of Access to or across the property. Did a former owner place restrictions on the use of the property? Will the former owner have the right to get the property back if the restrictions are violated?
- A Deed will not answer these questions, an Abstract of the title may not reveal the answer. What protects you against Recorders errors or matters not of record? Only a Title Insurance Policy!
My present mortgage is covered by a Title Insurance Policy and now I am refinancing, do I need another policy covering the new Mortgage?
Yes, you will need a new policy. The policy on your present mortgage is reduced as the mortgage is paid down. When you refinance and payoff the mortgage, the policy will terminate. You may be entitled to a reduced rate based on the amount remaining on the present mortgage.
What happens if there is a claim against my property? Do I have to pay for the legal defense in the matter?
No! The Title Company will hire legal counsel, at the company’s expense, and take the action it deems appropriate to clear the claim. If the company is not able to correct the problem, your losses will be covered by the policy.
Defects in Title
What are the problems that could affect my title?
The following are some of the types of title defect that would adversely (negatively) affect your property:
- Forged deeds, mortgages, satisfaction or release of mortgages and other instruments
- False impersonation of the true owner of the land or his consort
- Instruments executed under fabricated or expired power of attorney (death or insanity of principal)
- Deed apparently valid but actually delivered after the death of the
- Grantor or Grantee, or without the consent of Grantor
- Deeds by persons of an unsound mind
- Deeds by minors
- Deeds not properly delivered
- Deeds which appear to convey title but are really mortgages
- Outstanding prescriptive rights not of record and not disclosed by survey
- Descriptions apparently but not actually adequate
- Duress in execution of instruments
- Failure to include necessary parties in judicial proceedings
- Federal estate and gift tax liens
- State inheritance and gift tax liens
- Errors in tax records (For example, listing payment against wrong property.)
- Ineffective waiver of tax liens by tax or other govern authorities repudiated later by successors
- Corporation franchise taxes as lien on all corporate assets, notice of which does not have to be recorded in the local recording office
- Erroneous reports furnished by tax officials, but not binding on municipality
- Tax homestead exemptions set aside as fraudulently claimed
- Lack of capacity of foreign personal representatives and trustees to act
- Deeds from non-existent entities
- Interests arising by deeds to fictitious characters to conceal illegal activities on the premises
- Deeds in lieu of foreclosure set aside as being given under duress
- Ulta vires deed given under falsified corporate resolution
- Conveyances and proceedings affecting rights of servicemen protected by Soldiers and Sailors Civil Relief Act
- Federal condemnation without filing of notice (Federal law does not require filing of notice of taking in local recording office.)
- Deed from record owner of land where he has sold property to another purchaser on unrecorded land contract and the purchaser has taken possession of premises
- Defective acknowledgment due to lack of authority of notary. (Acknowledgment taken before commission or after the expiation of commission.)
- Deed of property recited to be separate property of Grantor which is in fact community or joint property
- Lack of a legal right of access to and from the property
- Matters affecting title whose origins existed before the period of title examination and which have not prescribed by operation of law
- Deeds by persons apparently single but actually married
- Deed from bigamous couple-prior existing marriage in another jurisdiction
- Undisclosed divorce of spouse who conveys as sole heir of deceased consort
- Undisclosed heirs
- Misinterpretation of wills, deeds and other instruments
- Birth or adoption of children after date of will
- Children living at date of will but not mentioned therein
- Discovery of will of apparent intestate
- Discovery of later will after probate of first will
- Administration of estates and probate of wills of persons absent but not deceased
- Conveyance by heir, devisee or survivor of a joint estate who murdered the decedent
- Deed from trustees of purported business trust which is in fact a partnership or joint stock association
- Deed of executor under non-intervention will when order of solvency has been fraudulently procured or entered
- Deed to or from corporations before incorporation or after surrender of forfeiture of charter
- Claims of creditors against property conveyed by heirs or devisees within prescribed period after owner’s death
- Mistakes in recording legal documents (For example, incorrect indexing, errors and omissions in transcribing and failure to preserve original instruments.)
- Record easement, but erroneous ancient locations of pipe or sewer line that does not allow route of granted easement
- Special assessments where they become lien upon passage of resolution and before recordation or commencement of improvements for which assessed
- Lack of jurisdiction of person in judicial proceedings
- And there are many others…
How long does it take for the company to issue a Commitment and for me to get to Closing?
We try to allow two weeks in order to get the necessary searches and to do a thorough examination and reading of the title. If we are advised that there is a need to reduce the time, this can be accomplished in most cases. We do everything possible to accommodate the time constraints of our clients.
