What is title insurance?
Real estate has traditionally been a family’s most valuable asset. It is a form of wealth that is protected by many laws. These laws have been enacted to protect one’s ownership of real estate and the improvements located on the land.
The owner, the owner’s family, and the owner’s heirs have extremely strong rights in and to the property you are purchasing. In addition to the owner, there may be others who have rights or claims in and to the property that you are buying.
Those who may have an interest in or lien upon the property could be governmental bodies, contractors, lenders, judgment creditors, the Internal Revenue Service or various other individuals or corpora- tions.
The real estate may be sold to you without the knowledge of the party having claim in and to the property. In addition, you may purchase the real estate without having any knowledge of these rights or claims.
In either event, these rights or claims remain attached to the title of the property that you are buying until they are extinguished.
A WORD ABOUT REAL ESTATE
TILE INSURANCE PROTECTS YOUR ASSETS
Title insurance gives you the assurance that possible clouds on title to the property you are purchasing—which can be discovered from the public records—have been called to your attention so that such defects can be corrected before you buy.
Additionally, it is insurance that if any undiscovered claims covered by your policy arises out of the past to threaten your ownership of real estate, it will be disposed of, or you will be reimbursed exactly as your title insurance policy provides.
WILL YOU GET CLEAR TITLE?
It is of utmost importance that you receive clear title to the property when you purchase real estate. In order to do so, you must first be informed of any existing rights or claims that may be asserted by any party against the title to the property.
Any of those rights or claims that are unacceptable to you must be resolved or extinguished prior to your purchase of the property. In addition, you will want to be protected against any past undiscovered rights or claims that may, in the future, threaten your title and possession of the property.
Title insurance provides you with this twofold protection.
HOW DO YOU FIND OUT WHAT CLAIMS EXIST?
In order to determine the status of title, Chicago Title conducts a diligent search of the public records for the documents associated with the property.
Chicago Title then examines those recorded documents in order to determine if there are any rights or claims that may have an impact upon the title such as unpaid taxes, unsatisfied mortgages, judgments, and tax liens against the current or past owners, easements, restriction, and court actions.
These recorded defects, liens, and encumbrances are reported to you prior to your purchase of the property. Once reported, these matters can be accepted, resolved or extinguished prior to the closing of the transaction.
In addition, you are protected against any recorded defects, liens, or encumbrances upon the title that are unreported to you and which are within the coverage of the particular policy issued in the transaction. This is the first benefit you receive from title insurance.
ONLY ONE PREMIUM
Unlike other forms of insurance, the original premium is your only cost as long as you or your heirs own the property. There are no annual payments to keep your Owner’s Title Insurance Policy in force.
WHAT ABOUT UNDISCOVERED CLAIMS?
The title to the property that you have purchased could be seriously threatened or lost completely by hazards that are considered “hidden risks.”
“Hidden risks” are those matters, rights, or claims that are not shown by the public records and, therefore are not discoverable by a search and examination of the public records.
Matters such as forgery, incompetency or incapacity of the parties, fraudulent impersonation, and unknown errors in the records are examples of “hidden risks” which could provide a basis for a claim after you have purchased the property. In order to protect you against this possibility, Chicago Title provides insurance coverage for such claims. This is the second benefit you receive from title insurance.
HOW DOES A TITLE INSURANCE POLICY PROTECT AGAINST ALL THESE CLAIMS?
If a claim is made against your insured title, Chicago Title protects you by:
(1) Defending your title; in the court if necessary, at no cost to you, and
(2) Bearing the cost of settling the case if it proves valid, in order to protect your title and maintain your possession of your property.