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Home Buying Title insurance - Important Information About The Insurance

Important Information About The Insurance

What is title insurance?
Title insurance is the application of insurance to hazards in real estate titles.

What is “Title”?
“Title” is the foundation of ownership of property. It signifies that you have a lawful right to possess that property and to use it within the restrictions enforced by authorities or limitations on its use—superimposed on the basic right to possession by previous owners.

What are the difference between relying on an abstract and lawyers opinion versus title insurance policy?
(a) An abstract is a compilation of written instruments affecting title to a property. An attorney’s opinion of ownership and state of title disclosed by the abstract. An abstract and attorney’s opinion don't divulge various defects in the title, such as fraud, counterfeit, defective deeds, incompetency of parties signing documents or clerical errors in the records. As a matter of fact, an abstract and lawyers opinion may not uncover many of the title defects that can exist. So, chance of recovery in the event of a title loss therein case reckons entirely on the solvency of the attorney examining the title. The attorney’s liability is limited to errors and oversights that would not be made by a diligent attorney. The attorney is not liable for loss caused by hidden defects.

(b) A title insurance policy indemnifies the insured against monetary loss caused by defects in title not expected to in the policy.

Why should I protect the home I purchase with title insurance?
Because without title insurance, you become a self-insurer. This is unadvisable unless you're in a financial position to lose the money you've invested in you home without upsetting you financial condition in any way.

Are there different types of title insurance of title insurance policies?
There certainly are. First, there is the Owner’s Policy that the home purchaser need for his or her protection. Then, there is the Mortgagee’s Policy, which protects only the mortgage/money lender. Most financial institutions lending mortgage money on a wide scale insist upon Mortgagee Title Policies for their protection.

If the lender is acquiring a title policy, why do I as an owner need one?
The lender’s policy protects the lender’s interest only and doesn't provide protection to the owner.

How does title insurance help protect my home?
It places the assets of a corporation behind the title to your home. If attacked, the title will
be defended without cost to you and if the title, or any part of it, should be defective, you will be reimbursed, up to the face amount of your policy, for any financial loss incurred.

How much does the title insurance cost and how long am I protected?
For the protection rendered, the cost is modest. While the rates are graduated in Texas, a
$100,000 owner policy costs $1,023.00 or about 1% of the cost of the property. Unlike other insurance policy with annual premiums, title insurance premiums are paid one time and protect you as long as you and your heirs own the property.

Why won’t the seller’s title policy protect me?
Their policy only relates the title as of the date of the policy, in other words, their date of purchase of the home. Since that date, the insured could have conveyed the property or given rights to others in the property. Once the homeowner signs a Warranty Deed, the policy converts to a Warranter’ Policy and follows the owner, not the property.

Article Source: Real EstateTips from top notch experts

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