| Why Do You Need Title Insurance? | ||
To protect possibly the most important investment you'll ever make -- the investment in real estate. Without it, you become a self-insurer. No other property has a useful life that compares with the life of land. Owners die, new ones succeed, but land goes on forever. Owners of goods may change their location at will, but land is immovable. Being both permanent and immovable, it lends itself to the absorption of innumerable rights. Over the ages, this so impressed lawyers and jurists that they formed a separate body of law for land. These laws, creating many types of rights in land, are so numerous and so complex it is impossible for there to be a mathematical certainty of ownership. Many title problems can arise to cause the complete or partial loss of your investment, and even the most careful search of the public records by experienced title examiners may not find every title problem. Because some problems are hidden, your title may appear to be perfect but in fact there may be a problem that is a land mine waiting to explode. Such a problem is known as a title defect. A title defect is anything in the entire history of ownership of a piece of real estate which may encumber the owner's right to the "peaceful enjoyment" of the property or which may cause the owner to lose any portion of the property. To give you an idea of the types of title problems that may occur, we have compiled this list of title defects that could result in partial or complete loss of your property or an expensive lawsuit:
THE LOAN POLICY DOES NOT PROTECT THE BORROWER A lender goes to great lengths to minimize the risk of lending money for the purchase of real estate. First, credit is checked as an indication of the borrower's ability to repay the loan. Then, the lender seeks assurance that the quality of the title to the property to be acquired and which will be pledged as security for the loan is satisfactory. The lender does this by obtaining a Mortgage Title Policy. The Mortgage Policy protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of lending. But, this policy only protects the lender's interest. It does not protect the buyer-borrower. That is why a real estate purchaser needs an Owner's Policy, which can be issued at the same time as the Mortgage Policy, usually for a nominal one-time fee. An Owner's Title Policy will pay for defending against any future lawsuit attacking the title of the Insured and will either clear up title problems or pay the Insured's losses, all for a one-time premium. An Owner's Title Policy remains in effect as long as the insured, or the insured's heirs, retain an interest in the property, or have any obligations under warranty in any conveyance of it. An Owner's Title Policy, issues simultaneously with a Mortgage Policy, is the best title insurance value a property owner can get.
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