The Need for Title Insurance When Buying Property
By Sandy Flores
Special to Excelsior
Buying your first home is one of the most important and delicate tasks that we have to decide and perform. Once you have taken this important decision, it is necessary to take certain precautions.
One observation we have to consider is the ‘Property Title Insurance’. Now maybe you’re wondering why a ‘Safe Property Title’ is required? Well, buying a home is certainly one of the most momentous achievements that an individual may experience, and it is vital for you and your lender to be sure that the property is not bearing defected title that could jeopardize the interests of the property. For this reason, the title insurance is not only necessary and important, but is also protected by law.
While buying property, you get the title of the property rather than the land itself, but there is a risk and the possibility that his title may be limited by legal rights and claims made by others, the which you have no knowledge.
Each year title insurance companies spend a high percentage of their income by collecting, storing, maintaining and analyzing official records for information that affects title to a property. Their experts are trained to identify the rights that others may have on your property, such as recorded liens, legal actions, litigation and other interests in different problems.
Before closing a transaction, the title company will proceed to “clear” those issues that do not apply to your property. Be aware that the title problems may limit their use and enjoyment of real estate and have negative financial consequences.
Defects in the title could threaten the security interest that your mortgage lender has in the property. The title insurance process begins with a search of title records that are specific to the property you are buying. The results of this search can publicize problems encountered in the history of the property title, which must be corrected before issuing a new title. Some of these problems that might arise are: mortgages, outstanding judgments and tax liens, deeds, wills and trusts that contain interest and incorrect names, incorrect notary acknowledgments, bondage, etc..
It is necessary to clarify that despite all the experience and dedication with which insurance companies conduct searches and investigations, hidden defects can arise after closing the purchase of real property, causing a costly and unpleasant surprise.
We can consider as examples of previously undisclosed heirs with claims on the property, forged deed does not transfer title to real estate, instruments executed under a power of attorney expired or counterfeit, errors in public records, etc..
Title insurance offers financial protection against these and other hidden defects in the title through negotiation between the title insurer and third, payment for protection against damage to property title insurance settlement and payment of claims.
The rates for title companies are archived at the California Department of Insurance, and each company is required to put them on public display in the list. As in all matters of competition, prices vary by company, so before deciding which company to use, compare between them. The two basic types of title insurance is right.
Own Coverage and protection for the lender or mortgagee
Normally the owners title insurance is issued based on the value of the real estate purchase and can last forever, even after the insured sells the property, but this depends on the type of policy you have the owner.
By contrast, the amount needed for the title insurance decreases as the mortgagee be paying the loan until it finally disappears. Most lenders require title insurance to mortgage lenders by way of guarantee for their investment in real estate, as require fire insurance and other types of coverage as investor protection.
Title insurance provides protection for home buyer’s against numerous claims of securities and possible losses.
The title insurance policies provide for, so unique and important protection for both buyers and mortgagees of properties who wish to make safe investments.
As always, it is advisable to seek advice from a professional in Real Estate to determine and make a more informed decision and advantageous for you.