What is Title Insurance and Why is 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 policy are there?
What searches title company conduct and how?
What title policy covers and for how much?
What is Title Commitment?
How much a title policy cost?
What is the Difference between Title Insurance and Property
Insurance?
Who selects the title company (seller or the buyer)?
What is Title Insurance and Why is 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
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
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 Title Insurance and Property
Insurance?
To get more detail information about this subject, please
see:
Title_Insurance_vs_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_Company.asp
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