About Title Insurance
What Is Title Insurance?
Contrary to what people often believe, title insurance is not like other forms of insurance. In fact, many people are often confused about what title insurance is and what it covers because of how different it can be compared to other types of insurance. For example, title insurance does not cover things that typical homeowner's insurance covers, like fire or flooding. Title insurance will not protect your home from a leaky roof. However, what title insurance does cover is anything that relates to the title to land or improvements.
Cash buyers often have the ability to make their own decision about buying Title Insurance - however, it is extremely rare for buyers to forego the service. However, if you are shopping for homes for sale in california (and in most states) and you need a bank loan loan to finance the purchase, count on getting title insurance.
Title insurance insures the validity of the owner's or leaseholder's title, the validity, enforceability, and priority of the lender's lien; and the validity, enforceability, and priority of easements, covenants, conditions, and restrictions, assignments and royalties, including other real-property-related matters. Title insurance will not protect title problems in the future; title insurance does cover past events that affect title of the party being insured, with the exception of any past events that the title insurance policy specifically excludes or excepts.
What does Title Insurance cover?
- Back taxes
- Undisclosed liens
- Legal judgments
- Unrecorded easements and access rights
- Defects and other unrecorded documents
- Building permit violations from previous owners
- Subdivision maps
- Covenant violations from previous owners
- Living trusts
- Structure damage from mineral extractions
Buying a Home?
- Title insurance will protect your investment in the case of any unexpected prior title issues.
Refinancing your Home?
- Having Lenders title insurance is necessary to protect the banks loan.
Selling a Home?
- Some sellers are required to provide new buyers with a title policy depending on the location.
Title Insurance for Investors
- Title Insurance for Investors can prove beneficial by helping to manage transactions more effectively which may result in more time and money.
Common Misunderstandings About Title Insurance
Because title insurance can be confusing to people, there are often a lot of misunderstandings about what title insurance covers and the type of protection it offers. There are a number of common mistakes people fall into when making assumptions about title insurance, so it is very important to stay informed and to speak with a professional when dealing with issues that relate to title insurance.
One common misunderstanding in title insurance is what the preliminary report actually represents. The preliminary report and the title policy do not contain representations of the state of title, and do not represent the current state of title to the property. What is important to remember about the preliminary report is that it is an offer to issue insurance subject to specific exclusions and exceptions.
Public records in title insurance and chain of title are not synonyms, another common mistake people make regarding title insurance. While it is true that public records include documents that provide constructive notice, it is important to remember that not every recorded document in the chain of title provides constructive notice.
It is also important to keep in mind that title insurance is not permanent and that it only covers the named insured. Title insurance does not generally pass down and benefit subsequent owners, even in cases of voluntary transference of the property. In some cases, loan policies can benefit assignees of the loan, however, coverage can be lost or impaired due to potential future loan modifications.
Getting Informed About Title Insurance
Title insurance can be a very complicated area, but it's important to consider the benefits and protection that title insurance can provide. It's important to speak with a professional about title insurance in order to determine if title insurance is something that you need.