Buyers and Sellers

Owning a Home:

 

We know you are likely making the most significant investment of your life and you may have questions. A title report tells you what issues might be attached to the property you are purchasing such as a lien or an easement. Title Insurance guarantees that the Title Report is correct and protects your investment against these possible issues. Title Insurance guarantees that the property you are purchasing is as it is described on the title report.

  • When a person purchases a parcel of real estate, it is not only the physical property that is acquired, but also the seller's rights and interests (i.e., the seller's "title"), in and to the property.
  • Before purchasing real property, the buyer needs to know what rights the seller can convey and who else may have rights or interests in the property, including any encumbrances that may affect the use or enjoyment of the land.
  • Because land endures over generations, many individuals and entities may acquire rights and claims to a particular property, and these interests can impact and LIMIT the title of any seller.

The quick answer is no. There is no law that says you have to have Title Insurance. That being said, a new lender or buyer of a piece of property will probably require it to protect their investment.

Simply stated, the title to a piece of property is the evidence that the owner is in lawful possession of that property.

A preliminary report is a report prepared by a title company before issuing a title insurance policy. This report shows the ownership of a specific parcel of land, together with the liens and encumbrances that will not be covered under a subsequent title insurance policy.

The report contains the conditions under which the title company will issue a particular type of title insurance policy. It lists title defects, liens and encumbrances, which would be excluded from coverage if the requested title insurance policy were to be issues as of the date of the preliminary report.

A preliminary report provides the buyer with an opportunity to seek the removal of objectionable items referenced in the report, prior to closing the sale.

Pay particular attention to the nature of the ownership interest in the property you will be receiving, as well as any claims, restrictions or interests of other people involving the property. The most common form of interest is "fee simple" or "fee", which is the broadest form of interest an owner can have in land. Liens, restrictions and interests of others, which are being excluded from coverage will be listed numerically as "exceptions" in Schedule B of the preliminary report. An example of a common type of third party interest is an easement given by a prior owner, which may limit the owner's use of the property. A printed list of standard exceptions and exclusions listing items not covered by your title insurance policy may be attached as an exhibit item to your report.

An order will be placed with the title company shortly after escrow is opened, which will begin the process of producing the report. Processing the report entails the assembly and review of certain recorded matters relative to both the property and the parties to the transaction. The "exceptions" will remain listed as such unless they are eliminated or released prior to the transfer of title.

Absolutely not. A preliminary report is a statement of terms and conditions of the offer to issue a title insurance policy, not a representation as to the condition of title. No contract or liability exists until the title insurance policy is issued to a particular person.

No one other than the named insured may claim the benefit of the policy.

No. It is important to understand that the preliminary report is not a written representation as to the condition of title and may not list all liens, defects and encumbrances affecting title to the land, but only reports the current ownership and matters that the title company will exclude from coverage if a title insurance policy should later be issued.

Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.

Insurance such as car, life, health, etc., protects against potential future events and is paid for with monthly or annual premiums. A title insurance policy insures against events that occurred in the past of the real estate property and the people who owned it, for a one-time premium paid at the close of the escrow.

Title insurance protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the insurance policy.

Purchasers and lenders need title insurance in order to be insured against various possible title defects. The buyer, seller and lender all benefit from issuance of title insurance.

After the escrow officer or lender opens the title order, the title agent or attorney begins a title search. A Preliminary Report is issued to the customer for review and approval. All closing documents are recorded upon escrow’s instruction. When recording has been confirmed, demands are paid, funds are disbursed, and the actual title insurance policy is created.

An endorsement is a change to an insurance policy that adds to or restricts the original coverage terms. It may not be part of the original agreement, however it becomes a legal part of the policy once it is added.

For additional questions please contact us at [email protected] or call us at 844.743.8485