Title
Insurance Definition
A
policy of title insurance is a contract of indemnity between the insured
and the insuring company relating to the title to the land described in
the policy, protecting the insured against loss of damage by reason of
defects, liens or encumbrances of the insured title existing at the date
of the policy and not expressly excepted from its coverage.
The policy is issued after a complete
search and examination of the public records and shows the condition of
the record title, including any money obligations outstanding against
the property, easements and other matters which may affect the rights of
ownership, possession and use of the property.
Title insurance protects the
"record" title, insuring it is good subject only to the
exceptions expressly set out in the policy. It also insures against
certain matters which do not appear of record, such as forgery, identity
of parties, incompetence of former owners, interest of missing heirs,
and status of individuals not having the "right" to sell
property.
There are different types of policies.
Owners policies are issued to real estate owners. Purchasers policies
are issued to purchasers of real estate under contract. Mortgage
policies are issued to mortgage companies. In addition there are several
other special forms of policies. There is a type of policy to meet the
requirements of almost any form of real estate transaction.
Title
Insurance Protection
Title Insurance insures
that the "record" title is good subject only to the exceptions
expressly set out in the policy. lt also insures against certain matters
which do not appear of record, such as forgery, identity of parties,
incompetence of former owners, interest of missing heirs, and status of
individuals not having the "right" to sell property.
The standard owners policy and standard
mortgage policy are based on public records of the recording district in
which the land is located. It does not insure against matters which
would only be disclosed by actual inspection or survey of the property.
It does not insure against certain matters not shown by the public
records such as unrecorded easements, liens or money obligations;
unrecorded utility rights of way, public or private roads, community
driveways and other types of encumbrances, or against the rights or
claims of persons in possession of the property which are not shown by
the public records.
Upon application, the issuing company may
specially cover matters which are disclosed by a physical inspection
and/or a survey of the property, subject to any exceptions which the
inspection will determine to be proper. An additional risk premium is
charged for this type of coverage. Insurance of this kind is called
extended coverage.
Issuance
of Title Insurance Policy
An owner's policy protects only the owner
while a mortgage policy protects only the holder of the mortgage on the
property. Separate policies are required to protect both interests.
Special rates are available when both owner's and mortgage policies are
applied at the same time.
The owners policy of title insurance
usually is issued after the deed to the buyer is delivered and recorded.
A purchasers policy is usually issued after the contract has been
executed by both parties or after the signed contract has been recorded.
The mortgage policy of title insurance is usually issued after the
mortgage or deed of trust has been properly executed and recorded.
The coverage of your policy is against
all matters that appeared of record up to the date of issuance of your
policy. Since that time many documents may have been recorded, some of
which may affect the title to your land. Taxes and assessments may have
accrued and be unpaid. There may have been actions in court affecting
your title. The purchaser is entitled to have full information and
protection as to the condition of the title right up to the date of his
purchase. In addition, there may be matters of record which would
prevent either the seller or buyer from selling, buying, or mortgaging
land until such matters have been cleared. These items include such
things as federal tax liens, judgments, incompetencies, divorce actions,
and other conditions which the title search may disclose. |
