Insurance
Title Insurance
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4 of 5 Insurance
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Title Insurance protects the rights of ownership, possession and
use of a property and is a contract of indemnity between the insured
and the insuring company. It
protects the insured against loss or damage by reason of defects,
liens or encumbrances of the insured title.
The Policy shows the condition of the record title and any money
obligations outstanding against the property including easements and
other matters affecting the Title Insurance.
It also insures against that which may not appear on record,
such as forgery, identity of parties, incompetence of former owners,
interest of missing heirs, and status of individuals not having the
"right" to sell property.
There are different types of policies including:
Owner’s Policies
which are issued to real estate owners,
usually issued after the deed to the buyer is 'delivered' and
recorded.
Purchaser’s Policies
are issued to purchasers of real estate under contract after the contract has
been executed by both parties or after the signed contract has been
recorded.
Mortgage Policies are
issued to mortgage companies, usually issued after the mortgage or
deed of trust has been properly executed and recorded.
An Owner's Policy protects only the owner while
a Mortgage policy protects only the holder of the mortgage on the
property. Should the need to protect both interests arise, separate
policies are required with special rates available when both Owner's
and Mortgage policies are applied at the same time.
The standard owners policy and mortgage policy are based on
public records of the recording district in which the land is
located. It does not insure against matters which would only be
disclosed by actual inspection or survey of the property nor does it
insure against certain matters not shown by the public records such
as unrecorded easements, liens or money obligations; unrecorded
utility rights of way, public or private roads, community driveways
and other types of encumbrances, or against the rights or claims of
persons in possession of the property which are not shown by the
public records.
Upon application, the issuing company may specially cover matters
disclosed by a physical inspection and/or a survey of the property,
subject to any exceptions which the inspection will determine to be
proper. An additional risk premium is charged for this type of
coverage. Insurance of this kind is called 'extended coverage'.
The coverage of your policy is against all matters that appeared
of record up to the date of issuance of your policy. Since that time
many documents may have been recorded, some of which may affect the
title to your land. Taxes and assessments may have accrued and be
unpaid. There may have been actions in court affecting your title.
The purchaser is entitled to have full information and protection as
to the condition of the title right up to the date of his purchase.
In addition, there may be matters of record preventing either the
seller or buyer from selling, buying, or mortgaging land until such
matters have been cleared. These items include such things as
federal tax liens, judgements, incompetencies, divorce actions and
other conditions the title search may disclose.
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