Common Questions About Title Insurance
Very simply, title insurance protects the legal ownership of a piece of real estate for the person who is insured. The laws concerning the ownership of the real estate are different from those concerning any other type of property.
Many times, problems associated with a piece of real estate cannot be discovered by a title search. Some liens can be recorded after you purchase the property and have a retroactive effect which could potentially cause serious legal consequences. In addition, forgery or fraud discovered later could invalidate what appeared to be a legitimate document in the search. human error can cause a document to be improperly recorded. Many, many other issues can arise after you acquisition. With only a search, you are only protected from the items that are known from the search and removed during the closing process.
Title insurance does not have a recurring premium as most types of insurance do. Once paid, the policy protects you for as long as you own the property. The premium is determined by the amount of the policy, usually the purchase price or loan amount and the cost is regulated by the Pennsylvania Insurance Department. For your transaction, please call us for a quote or rate schedule.
Land is considered a different form of property for two reasons: first, it does not have a limited life span like most other types of property; and second, each piece of real estate is unique. Because of this nature an owner has very strong rights in the property. Others, however can also hold rights simultaneously and these rights can affect you acquire the property while these competing rights still exist. These rights could give others access to use the property, prevent you from using the property as you would like, or even allow the property to be sold at a sheriff sale.
Part of the process of obtaining a title insurance policy is completing a title search. A title search can discover judgments, mortgages, delinquent taxes, past due support payments and other liens that are considered a “”cloud on the title.” Your title insurance agent will make certain that any clouds discovered are removed as part of your purchase of that property.
In the event that a cloud is discovered later, the title insurance agent and underwriter will cooperate to make certain that the cloud is removed by either going to court to have it legally adjudicated as invalid or by paying what is necessary to remove the claim.
A mortgage loan is the preferred method of financing real estate, because it generally provides the lowest possible interest rate. If in the event of a default, the lender can attempt to recover its loss through a foreclosure. Title insurance guarantees the lender that it will receive its payment from the foreclosure before other creditors. By guaranteeing this ability to recover losses, the lender’s risk is reduced enabling the lender to pass along its savings to you in the form of a lower interest rate. So while title insurance amy be an initial cost, it provides substantial loan interest savings to the customer over time for as long as you have the loan.