Why is there a need for Title Insurance on a property?
Title insurance is protection for the buyer of a home. The purchase of a home is one of the most important achievements that an individual will ever complete and one of the largest investments that should be protected to avoid losses. You and your lender will want to be sure that the property has no defects in the title that might jeopardize the interests of the property that you are getting. For this reason, title insurance is not only necessary and important, but it is also covered in a unique way by the law.
When you purchase a real estate ‘good’ you get the title to the property rather than the land itself. There is the possibility that your title of property may be limited by legal rights and claims made by others of which you have no knowledge. Each year the titles insurance companies spend a high percentage of revenue collecting, keeping, maintaining, and analyzing the official archives for information affecting the title to a property.
Experts from these companies have the necessary training to identify the rights that others may also have property, registered liens, legal actions, interests in litigation and other different problems.
Before closing a transaction, the title company will proceed to “clarify” those problems and if there are, remove them before you transfer the title of property. Bear in mind that title problems may limit their use of real estate and have negative financial consequences.
The title insurance process begins with a search for records that are specific to the property you are buying. The results of this search can disclose problems that are in the history of the property and that must be corrected before issuing a new title insurance. Among some of these problems that may arise are: mortgages, judgments and outstanding tax liens, writings, inheritances and trusts that contain interest and incorrect names, as well as incorrect notary acknowledgements, etc.
It is necessary to clarify that, despite all the experience and dedication with which perform searches and investigations, may emerge hidden defects after closing the purchase of a real estate property, resulting in a costly and unpleasant surprise. We can be considered as examples of heirs not disclosed previously, with claims on the property, counterfeit scriptures that do not transfer title to the real property, 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 of title through the negotiation between title and third-party insurer, the payment by the defense against a dispute to the title in accordance with the insurance and payment of claims.
The rates of the title companies are archived at the California Department of insurance and each company has the obligation to put it on the list exhibited to the public. As in any business competition, prices vary according to the company; therefore before deciding which company will use compare among them. An agent in real estate can assist you in making this decision.
The owner and the lender or mortgagee protection coverage is normally issued based on the value of real estate purchase. Most lenders require a title insurance for mortgage by way of guarantee creditors for your real estate investment, as also required by the fire insurance or other types of coverage for your protection and that of the investor.
Title insurance provides protection to home buyers against numerous claims of titles and possible losses. Title insurance policies provide thus unique and important protection for mortgage creditors of property who want to make safe investments both buyers.
Make sure you are fully protected when purchasing a property. As always, it is recommended to consider the advice of a specialist, to determine the policy that suits you, as well as answers to your questions about the coverage of them.