WHAT IS TITLE INSURANCE?
Everyone has experience with
Insurance at some point in their
lives. Especially when it comes
to Real Estate.
Many have, or will in the
future, purchase Home Owner’s
Insurance to protect against the
possibility of fire, theft or
flood damaging their home and
their belongings. Some will even
purchase a Home Owner’s
Warranty, to insure against the
possibility of a failing roof,
faulty wiring, or defective
appliances.
So why should the title to your
property be any different?
The physical structure of the
property is something that
people can see as a tangible
item to be insured. However,
when you purchase a house, there
are many years of history and
underlying paperwork that come
along with it. Just because
these items cannot be seen with
the eye, allows many people to
forget how important a clear
title is when purchasing a home.
Any of the following
circumstances can affect the
title to your home, including:
False impersonation of the true
owner of the property; forged
deeds, releases or wills;
undisclosed or missing heirs;
instruments executed under
invalid or expired power of
attorney, mistakes in recording
legal documents;
misinterpretations of wills;
Deeds by persons of unsound
mind; Deeds by minors; Deeds by
persons supposedly single, but
in fact married; liens for
unpaid estate, inheritance,
income or gift taxes; and fraud.
So what does Title Insurance do?
Title insurance will cover the
costs for defending against any
lawsuits that come against the
insured title, and will see that
the title problem is cleared up,
or pay the losses that the
insured assumes.
With a one time premium, an
Owner’s Title Insurance Policy
will insured you, or your heirs,
against title defects or
encumbrances for as long as you
have an interest in the insured
property, or are obligated under
a warranty of conveyance.
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WHY DO YOU NEED TITLE INSURANCE?
To protect possibly the most
important investment you'll ever
make - the investment in real
estate.
A lender goes to great lengths
to minimize the risk of lending
money for the purchase of real
estate. First, credit is checked
as an indication of the
borrower's ability to repay the
loan.
Then, the lender seeks assurance
that the quality of the title to
the property to be acquired and
which will be pledged as
security for the loan is
satisfactory. The lender does
this by obtaining a loan policy
of title insurance.
HOW CAN THERE BE A TITLE
DEFECT IF THE TITLE HAS BEEN
SEARCHED AND A LOAN POLICY
ISSUED?
Title insurance is issued after
a careful examination of copies
of the public records. But even
the most thorough search cannot
absolutely assure that no title
hazards are present, despite the
knowledge and experience of
professional title examiners. In
addition to matters shown by
public records, other title
problems may exist that cannot
be disclosed in a search.
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WHAT TITLE INSURANCE PROTECTS
AGAINST?
Here are just a few of the most
common hidden risks that can
cause loss of title or create an
encumbrance on title:
-
False impersonation of the
true owner of the property
-
Forged deeds, releases or
wills
-
Undisclosed or missing heirs
-
Instruments executed under
invalid or expired power of
attorney
-
Mistakes in recording legal
documents
-
Misinterpretations of wills
-
Deeds by persons of unsound
mind
-
Deeds by minors
-
Deeds by persons supposedly
single, but in fact married
-
Liens for unpaid estate,
inheritance, income or gift
taxes
-
Fraud
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THE LOAN POLICY DOES NOT PROTECT
THE BORROWER
The loan policy protects the
lender against loss due to
unknown title defects. It also
protects the lender's interest
from certain matters which may
exist, but may not be known at
the time of the sale.
But, this policy only protects
the lender's interest. It does
not protect the borrower. That
is why a real estate purchaser
needs an owner's policy, which
can be issued at the same time
as the loan policy, usually for
a nominal one-time fee.
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WHAT IS THE DANGER OF LOSS?
When it comes to matters of
title, a defect or encumbrance
may not only result in the loss
of large sums of money in
regards to the property, but may
also result in the loss of
ownership!
So, if the lender has title
insurance protection and the
owner does not, what possible
danger of loss exists?
As an example, assume real
estate was purchased for
$100,000. A down payment of
$20,000 is made, and a lender
holds an $80,000 mortgage lien,
or beneficial interest. The
lender acquires title insurance
protecting the lender's interest
up to $80,000. But the
purchaser's down payment of
$20,000 is not covered.
What if some matter arises
affecting the past ownership of
the property? The title
insurance company would defend
and protect the interest of the
lender. The purchaser, however,
would have to assume the
financial burden of his or her
own legal defense. If the
defense is not successful, the
result could be a total loss of
title.
The title insurance company pays
the lender's loss and is
entitled to take an assignment
of the borrower's debt. The
purchaser loses the down
payment, other equity in the
property that may have
accumulated, and the property.
And the balance on the note is
still due!
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There are few things more important than protecting your home.
Owner’s Title Insurance has been offered for more than 150 years,
because even the best title search and examination cannot protect
your equity and home from matters not appearing in the public
record.
The
standard policy covers you for defects and liens in the history of
your title through the date and time your Deed is recorded in the
public records. The ALTA Homeowner’s Policy of Title Insurance
provides coverage for many additional risks, including some which
might occur after the deed is recorded.
Below is a coverage comparison that will help you decide which
policy is the best for you to protect your ownership in your home.
BOTH POLICIES
INCLUDE:
| |
Standard Policy |
Enhanced Policy |
|
·
Mechanic’s Lien Coverage |
Yes |
Yes |
|
·
Third
Party claims an interest in the title |
Yes |
Yes |
|
·
Improperly executed documents |
Yes |
Yes |
|
·
Pre-Policy forgery, fraud or duress |
Yes |
Yes |
|
·
Non-recorded restrictive covenants |
Yes |
Yes |
|
·
Defective
recording of documents |
Yes |
Yes |
|
·
Prior
recorded liens not disclosed in the policy |
Yes |
Yes |
|
·
Unmarketability of the title |
Yes |
Yes |
|
·
Policy
insures anyone who inherits the property from you |
Yes |
Yes |
ADDITIONAL
COVERAGES IN ENHANCED POLICY:
| |
Standard Policy |
Enhanced Policy |
|
· Policy
insures the Trustee of your estate-planning trust |
No |
Yes |
|
· Policy
insures the beneficiaries of your trust upon your death |
No |
Yes |
|
· Automatic
increase in coverage up to 150% (not based on inflation) |
No |
Yes |
|
· Post
Policy Forgery |
No |
Yes |
|
· Post
Policy encroachment onto insured land |
No |
Yes |
|
· Legal
right to ACTUAL vehicular and pedestrian access |
No |
Yes |
|
· Coverage
for certain losses due to Building Permit violations
(subject to a deductible and liability limits) |
No |
Yes |
|
· Coverage
for certain losses due to zoning law violations (subject to
a deductible and liability limits) |
No |
Yes |
|
· Coverage
for certain losses due to existing violation of subdivision
law (subject to a deductible and liability limits)
|
No |
Yes |
|
· Post
policy structural damage from third party easement for
mineral extraction |
No |
Yes |
|
· Violation
of restrictive covenants identified in the Policy: |
|
|
|
· Resulting
in loss of title |
No |
Yes |
|
· Resulting
in loss from correction or removal |
No |
Yes |
· Resulting
in loss of use where single family
dwelling prohibited |
No |
Yes |
|
·
Forced
removal of existing structures that: |
No |
Yes |
|
·
Encroach
onto an easement identified in the Policy |
No |
Yes |
·
Violate a
building restriction line identified in the
Policy |
No |
Yes |
|
· Encroach
onto neighbor’s land (subject to a deductible and liability
limits if boundary wall or fence) |
No |
Yes |
For
Comparison Purposes Only. Both policies contain insuring
provisions, conditions, stipulations, exclusions & exceptions as set
out by the individual underwriter and the American Land Title
Association.
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TITLE
INSURANCE UNDERWRITING
Licensed Title Insurance Agents
Associated with Stonewall Title:
|
Mina Croson |
David Croson |
Jim Croson |
|
Trenna Croson |
Scott Olsen |
Matthew
Patton |
|
Karen Stramer |
Cindy Hall |
Kerry Page |
|
Maryrose Hunt |
Heather
Revard |
Michelle
Paprocki |
|
Jo Anne Meyer |
Racheal Watson |
William
Hampton |
The Nation's Leading
Title Insurance Underwriters
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