Frequently Asked Questions
What Is Title Insurance?
Title insurance is a contractual obligation that protects against losses that occur when title to a property is not free and clear of defects (e.g. liens, encumbrances and defects that were unknown when the title policy was issued).
Before you purchased your home, it may have gone through several ownership changes, and the land on which it stands went through many more. There may be a weak link at any point in that chain that could emerge to cause trouble. For example, someone along the way may have forged a signature in transferring title. Or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party for any claims and legal fees that arise out of such problems.
Who Should Purchase Title Insurance?
Lenders require title insurance as a condition for your loan. The two types of policies available are an owner’s policy and a lender’s policy. A lender’s policy insures that the lender’s security interest in the property has priority over claims that others may have in your property. A lender’s policy does not protect you. Similarly, the prior owner’s policy does not protect you. If you want to protect yourself from claims by others against your new home, you will need an owner’s policy. An owner’s policy insures the buyer for as long as he or she owns the property. This protection is limited to the value of the property.
Doesn’t the Lender Policy Indirectly Protect Me?
No, title policies are indemnity policies. This means they protect against loss and a lender policy would only cover the lender’s loss. Of course, the fact that the insurer issued a policy to the lender indicates that the title has been searched and nothing amiss has been found, but no search is 100% dependable. That is why an insurance policy is issued.
When Does Title Insurance Protection Begin and End?
With the exception noted later, title insurance only protects against losses from claims that arose prior to the date of the policy. Coverage ends on the day the policy is issued and extends backward in time for an indefinite period. This is in marked contrast to property or life insurance, which protect against losses resulting from events that occur after the policy is issued, for a specified period into the future.
Will Title Insurance Protect Me Against False Claims That Arose After I Purchased the Property?
The standard policy does not, which is a weakness. Many events beyond your control can reduce the value of your house after you buy it. If it is a newly-constructed house, sub-contractors claiming they had not been paid by the builder may place a lien on the house. Identity theft can result in a new mortgage you know nothing about. A neighbor could build on your land without your knowledge, thereby adversely possessing and possibly eventually taking your land. Or you may suddenly be told that you must correct a zoning violation of the previous owner.
To deal with these issues, a new policy with expanded coverage the Eagle Protection Policy has been developed. The Eagle Protection Policy offers (for the first time ever) 15 new and expanded title insurance coverage’s, including protection that extends into the future.
What are the 15 expanded title insurance coverage’s the Eagle Protection Policy offers?
The Eagle Protection Policy covers against forgery, encroachments, cloud on title, adverse possession, easement by prescription, building permit violation, encroachment of boundary walls, zoning violations, expanded access, violations of restrictions, subdivision violation, structural damage from mineral extraction, living trust coverage, automatic increase in coverage, and automatic survey coverage.
Does Title Express offer the Eagle Protection Policy?
Yes, at a slightly higher cost than the standard policy. For your peace of mind, Title Express will absorb all litigation and legal cost if you are ever challenged on any of the coverages. Ask your REALTOR or call us for a quote or any additional questions.
Why Do I Need to Purchase a New Policy When I Refinance?
You don’t need a new owner’s policy, but the lender will require the purchase of a new lender policy. Even if you refinance with the same lender, the existing lender’s policy terminates when you pay off the mortgage. Furthermore, the lender is concerned about title issues that may have arisen since you purchased the property, such as the lien mentioned in an earlier question. A new title search will uncover the lien, and you will have to pay it off as a condition for the refinance.
Insurers generally offer discounts on policies taken out within short periods after the preceding policy. Title Express policy discounts are available as far out as 2 years from the date of the previous policy.