Title insurance is meant to protect an owner’s or a lender’s financial interest in real property against loss due to title defects, liens or other matters. All too often, homebuyers are left sorting through title issues - we are an independent title insurance agency allowing us to issue title policies of several national underwriters to insure our customers receive the high quality insurance at competitive rates.
Having title insurance defends against a lawsuit attaching the title as it is insured. It can also reimburse the insured for the actual monetary loss incurred, up to the amount provided by the policy. Typically the real property interests insured are fee simple ownership or a mortgage. However, title insurance can be purchased to insure any interest in real property, including an easement, lease or life estate.
An easy way to understand is to compare to lenders who require fire insurance and other types of insurance coverage to protect their investment. Nearly all institutional lenders also require title insurance to protect their interest in the collateral of loans secured by real estate. Some mortgage lenders, especially non-institutional lenders, may not require title insurance. Buyers purchasing properties for cash (without a lender) often want title insurance as well.
Why You Need Title Insurance
When you purchase your home, how can you be sure that there are no problems with the home's title and that the seller really owns the property? Problems with the title can limit your use and enjoyment of the property, as well as bring financial loss. That is what a title search and title insurance are for.
The Title Search
After your sales contract has been accepted, a title professional will search the public records to look for any problems with the home’s title. This search typically involves a review of land records going back many years. More than 1/3 of all title searches reveal a title problem that title professionals fix before you go to closing. For instance, a previous owner may have had minor construction done on the property, but never fully paid the contractor. Or the previous owner may have failed to pay local or state taxes (See below for some other common title problems). Pennsylvania title insurance professionals seek to resolve problems like these before you go to closing.
The Owner's Title Policy
Sometimes title problems occur that could not be found in the public records or are inadvertently missed in the title search process. To help protect you in these events, it is recommended that you obtain an Owner’s Policy of Title Insurance to insure you against the most unforeseen problems.
Owner’s Title Insurance, called an Owner’s Policy, is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you or your heirs have an interest in the property. Only an Owner’s Policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include:- Errors or omissions in deeds
- Mistakes in examining records
- Undisclosed heirs
An Owner's Policy provides assurance that your title company will stand behind you — monetarily and with legal defense if needed — if a covered title problem arises after you buy your home. The Owner’s Policy protects you for as long as you or your heirs have an interest in the property.
You also have the option of purchasing a policy with expanded coverage. It’s called the Homeowner’s Policy and it covers more things than the Owner’s Policy. Ask your local title company for an explanation of the expanded Homeowner’s Policy so you can decide which policy is the best one for you.
The Loan Policy
Common Title Problems & Examples
1. Fraud & Forgery
Fraud and forgery are examples of hidden title hazards that can remain undetected until after a closing despite the most careful precautions. Although emphasizing risk elimination, an Owner’s Policy protects you financially through negotiation by the insurer with third-parties, payment for defending against an attack on the title as insured, and payment of valid claims.
2. Conflicting Wills
Conflicts over a will from a deceased former owner can cause major title headaches. Timing of filing of a deed, whether or not it was completed, and other probate issues can affect a new owner. Having an Owner's Policy of Title Insurance can protect a new owner.
3. Missing Heirs
Most new owners do not expect a long lost family member of a previous owner to suddenly appear, but it happens. When property is at stake and assets are valuable, a missing heir can attempt to challenge title. For a one-time charge at closing, an Owner’s Policy will safeguard against problems including those even an exhaustive search will not reveal.
Title Insurance and Refinancing
When you refinance you are obtaining a new loan, even if you stay with your original lender. Even if you recently purchased or refinanced your home, there are some problems that could arise with the title. For instance, you might have incurred a mechanics lien from a contractor who claims he/she has not been paid. Or you might have a judgment placed on your house due to unpaid taxes, homeowner dues, or child support for instance. The lender needs reassurance that the title to the property they are financing is clear.
We accommodate residential, commercial, and industrial clients, lenders, developers, attorneys and real estate professionals. No order is ever too big or too small. We are an independent title insurance agency allowing us to issue title policies of several national underwriters to insure our customers receive the high quality insurance at competitive rates.
When you need an attorney to represent you with your legal matters, contact the Law Offices of Michael Kuldiner, P.C. in order to obtain the best results possible in each case. To arrange a consultation, please give us a call at (215) 942-2100 or contact us by submitting the form at top right.