Title Insurance:

Title insurance provides coverage against losses and/or damages, which are caused due to defect or problems in the tile deed of the property. Title insurance policy is designed to compensate the new homebuyers – and the existing owners, against losses that are caused due to defects in their property ownership title.

The insurance policy usually covers attorney and court expenses or pays a loss caused by the defect in title up to the face amount of the policy subject to the terms listed in your policy.

Title insurance deals with the detection; prevention and/or elimination of damages that occur by title difficulties, which have their origin in the past. In other words, it provides coverage for past occurrence, which could result in a claim in future. In contrast, other insurances are based on protecting future occurrences, for e.g. flood, life etc.

Title insurance ensures that the policyholder receives a good and sellable title of the real estate. If you are seeking a mortgage, your lender will require you to have title coverage for your property.

Title insurance policies are normally purchased with closing of the real estate deal. It is paid in full a one time fee.

Problem in an ownership title is not a very uncommon phenomenon; and many people face property ownership disputes. Any problem in property title can have devastating effects in regard with your ownership of the property. It can even lead you to a point where you can loss your entire investment unless you have a title insurance policy. Problems with ownership title are usually caused if the rights of a previous owner were overlooked during title examination.

Title Examination or title search is a practice in which the public records of previous ownership title are reviewed and checked to confirm that they are in proper order. The examiner also checks the status of previous mortgages and sees that they are settled. Any problem found during a title search should be fixed before closing the property deal.

There can be numerous potential problems that can affect the title ownership of the property. For example, property claims by undisclosed heirs of previous owner/s, pending legal actions, right of ways, view easements, power line easements, mineral rights etc.

A good title search should discover all these potentially explosive dangers. However, there are often situations where the examiner misses out certain points during the course of title examination. This can be due to negligence on his/her part or due to wrong information in public records. In either case it creates a loophole on the title ownership deed, which can create ownership claims and disputes i.e. the title may face problems in the future.

Problem on the title of the property is known as “Defect” or “cloud” Remember that there may be "Hidden Hazards" that cannot be discovered from title search. For example, the marital status of a previous owner might not be correctly registered in the records and therefore can result in claim by his/her spouse. Then there are purely Forgery cases that can create ownership issues. Similarly, there can be confusion in the title due to identical name etc.

Title insurance covers the following:

• Problems that are not discovered during the title search
• Problems that were overlooked during the title search by the examiner
• Wrong entries in public records.
• Exclusions.

Note that the problems that occur after you purchase the property are not covered by title insurance. Many policies exclude easements, mineral rights, etc. from the title insurance.