Frequently Asked Questions About Title Insurance

A title is the foundation of property ownership. It is the owner’s right to possess and use that property within certain limitations.

Title insurance is your policy of protection against loss if any of these problems — even a hidden hazard — results in a claim against your ownership.

A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes and many other documents. The purpose of the search is to verify the seller’s right to transfer of ownership and to discover any claims, defects and other rights or burdens on the property.

If a claim is made against your property, title insurance will, in accordance with the terms of your policy, assure you of a legal defense and pay all court costs and related fees.

A title search can show a number of title defects and liens, as well as other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land.

Yes. There are some hidden hazards that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his/her marital status, resulting in a possible claim by his legal spouse. Other hidden hazards include fraud, forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you've purchased your home and jeopardize your right to ownership.

That depends on the claim. In an extreme case, you could lose your entire home and property and still be liable to pay off the balance of your mortgage. Most claims aren’t that dramatic, but even the smallest claim can cost you money, time and aggravation and you’ll still have to pay costs for a legal defense.

Not necessarily. A deed is just a document by which the right of ownership in land is transferred, whatever that right may be. It is not proof of ownership, and it doesn’t do away with rights others may have in the property. In addition, a deed won’t show you liens or claims that may be outstanding against the title.

An attorney’s opinion is based on a search of the public records. So, once again, even the most exhaustive search of these records may not reveal everything. It’s also important to remember that an attorney is not liable if you should suffer loss because of hidden hazards in the title.

Because the owner could, in a very short time, do many things to encumber the title. For example, he could grant easements or construct improvements that encroach on adjacent property. He could get married or divorced or have a lien filed against the property. It is necessary to conduct an up-to-date title search to uncover any such problems.

A title policy insuring the builder does not protect you. A great many things could have happened to the land since the builder's policy was issued. Liens, judgments and unpaid taxes for which prior owners were responsible may be disclosed after you purchase the property, causing you aggravation and costing you money.

Yes. Basically there are two different types of policies, a lender’s policy and an owner’s policy. The lender’s policy protects the lender’s interest in the property as security for the outstanding balance under the buyer’s mortgage. The owner’s policy safeguards the buyer’s investment or equity in the property up to the face amount of the policy. Title insurers in many states offer increased policy coverage through inflation endorsements to cover increases in value due to inflation.

Probably less than you think. Charges vary in different sections of the country, but generally the cost of title insurance (including search, examination and related services) amounts to about one percent, or less, of the cost of the property. Unlike other insurance premiums that must be paid annually, a title insurance premium is paid one time only, usually at settlement.

For as long as you or your heirs retain an interest in the property.

American Home Title Group, Inc. is a policy-issuing agent for First American Title Insurance Company and Commonwealth Land Title Insurance Company. When selecting a title insurer, it is important that you look for a company with expertise and experience, as well as the financial strength to protect you should a claim arise.