Q: I have been hearing a lot about title insurance recently. Exactly why is it needed?
A. Title insurance provides protections against such unforeseen elements as claims against the title of your home that weren't revealed during the title search. Most title hazards will show up during a title company's investigation of public records, but even the most exhaustive search may not bring all problems to light. Title insurance is written to provide protection against most undisclosed risks.
Q. Can you give a few examples?
A. One example might be a claim by a missing heir or a previous owner. Other possible claims could include liens by laborers for unpaid work, a deed conveyed by a married person purporting to be single, boundary disputes, or forged deeds. When claims are made, the title insurance company is responsible for satisfying legitimate insured claims or for defending the interests of the policyholder in court.
Q. Are different kinds of policies available?
A. Yes, generally there are two forms. The first is lender's title insurance. It is usually written in the amount of the home loan and protects the lending institution from losses resulting from defective titles. Lending institutions often will refuse to make a loan unless a lender's policy is purchased. Because lender's insurance expires when the mortgage loan is repaid, it does not protect the homebuyer from title defects. For this, you need a form of title insurance called an owner's policy. It usually is written in the amount of the real estate purchase price. Coverage continues as long as a property owner, his heirs or persons to whom he may bequeath it, retain an interest in the property.
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