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Title Insurance
definition – title insurance insures the status
of the state of title to a specific parcel of real property. In exchange
for a premium paid, title insurance companies assume the risk that title
to a parcel of real estate is as it is stated to be in the policy. A title
insurance policy indemnifies the buyer or lender against losses suffered
if title to the property is not as the policy states it to be.
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What is the need for
title insurance?
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Title insurance provides protections against such
unforeseen elements as claims against the title of your home that
weren't revealed during the title search. Most title hazards will
show up during a title company's investigation of public records,
but even the most exhaustive search may not bring all problems to
light. Title insurance is written to provide protection against most
undisclosed risks. Other factors that are researched are:
- Easements of record
- Restrictions,covenants, and conditions
- Verification of legal description
- Liens or judgments
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What are some examples?
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One example
would be a claim by a missing heir or a previous owner. Other
possible claims can include liens by laborers for unpaid work, a
deed conveyed by a married person purporting to be single, boundary
disputes, or forged deeds. When claims are made, the title
insurance company is responsible for satisfying legitimate insured
claims or for defending the interests of the policy holder in
court. |
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Are different kinds of
title policies available?
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Yes, and
generally there are two forms. The first is lender's title
insurance. It is usually written in the amount of the home
loan and protects the lending institution from losses resulting from
defective titles. Lending institutions often will refuse to
make a loan unless a lender's policy is purchased. Because
lender's insurance expires when the mortgage loan is repaid, it does
not protect the home buyer from title defects. For this, you
need a form of title insurance called an owner's policy. It
usually is written in the amount of the real estate purchase price.
Coverage continues as long as a property owner, his heirs, or
persons to whom he may bequeath it, retain an interest in the
property. |
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