Protecting Your Investment: Importance of Title Insurance

Unlike property and casualty insurance, such as auto or homeowner's insurance which protects against potential future events, title insurance protects the owner of real property from events and matters in the past which might result in loss or damage.

Title insurance is much more than just a lender requirement. For buyers, it’s a critical way of understanding what you are purchasing and being sure you actually own what you’ve bought, without third party claims to ownership or use of any part of it. For sellers, it’s a relatively inexpensive way to back up the warranties you are providing to your buyers.

Title insurance assures the owners of real property that their title is free and clear of anything that would affect its marketability (the ability of the owner to sell or borrow against the property).

The charge for title insurance is a one-time premium. The insurance coverage lasts as long as the insured owner, and his or her subsequent heirs, remain the owner of the property.

The Title Search

Because real estate is such a valuable possession and investment, it is important to have the assurance that buyers are receiving title to property that is free from defect. Hidden or unknown defects in title can create substantial losses, up to and including the loss of the property itself. The process of insuring a real estate transaction begins with a search and examination of public records to determine who owns the property, discovery of all liens and encumbrances against the property or its owner, disclosure of easements and restrictions, and disclosure of all other recorded interests in the property.

A thorough examination of public records brings to light matters which affect the title to real property including:

• Unpaid taxes and mortgages
• Judgments against the current or previous owners
• Easements
• Other interests in the property

Notwithstanding with the most thorough title search, there are occasions when unknown or hidden matters surface calling into question the integrity of title. Here are just a few examples:

• Forged documents
• Recorded documents signed by people without the legal authority
• Undisclosed heirs
• Misinterpretation of instruments such as wills and deeds
• Judgments against previous owners
• Unpaid debts

Title companies research and report all defects in the title to the subject property in order that such matters are corrected and cleared up before the transaction is closed.

What does buying a title policy mean to you?

Title insurance is the assurance that the title to the property you are purchasing is free of defects, and is clear and marketable. It is further assurance that all matters of record which could adversely affect the title to your property have been disclosed and/or resolved. Title insurance also insures against potential claims should an undisclosed event or matter threaten ownership and/or enjoyment of the property in question.

Having the peace of mind that someone is watching out for and protecting ownership interest is a logical choice, and South Oak Title is here to help!