The purchase of a home is often the largest single financial investment many people may make in their lifetimes. The importance of fully protecting such an investment cannot be overly-stated. Safe, sound, and reliable and title insurance is essential in protecting you in the event that an issue with the title arises.

What is Title Insurance?

It is the application of the principles of insurance to risks present in all real estate transactions. These risks are divided into two main categories: hidden hazards that cannot be detected in the examination of title, and human errors which will always be with us. Examples of hidden hazards are forgery, incompetence or grantor or mortgagor, unknown heirs, fraud, impersonation, etc.

Title insurance differs from other types of insurance by protecting against future losses arising out of events that have happened in the past. There are no annual premiums. A single premium, based on the amount of the sale or mortgage, is paid when the policy is issued and is good for the life of the policy. A lender’s policy, insuring the lender, stays in effect until the loan is paid off. An owner’s policy, insuring the buyer, is good as long as the owner or owner’s heirs own the property.

Preliminary Report or “Commitment for Title Insurance”

The title company will search and examine the public records to investigate information surrounding title to the property. The title search is used to create a preliminary report provided to the lender or purchaser before closing, and reveals the following:

• Who the legal owner of the property is
• That the “estate” or degree of ownership being sold is currently and accurately vested in the seller
• Property tax status and other public or private assessments
• The presence of any unsatisfied mortgages, judgments or liens that must be satisfied before “clear title” can be conveyed
• Existing easements, restrictions, rights of way or other rights granted to others