There are two basic kinds of title insurance:
- Mortgagee Policy (Protects the Lender)
- Owner’s Policy (Protects the Owner)
Most lenders require mortgagee title insurance as security for their investment in real estate, just as they may call for fire insurance and other types of coverage as investor protection.
Owner’s title insurance lasts as long as you, the policyholder – or your heirs – has an interest in the insured property. This may even be after you have sold the property.
How Does Title Insurance Work?
An important part of title insurance is its emphasis on risk elimination before insuring. This gives the policyholder the best possible chance for avoiding title claims and loss.
Title insuring begins with a search of public land records affecting the real estate concerned. An examination of related documents is then conducted by a title agent or attorney to determine whether the property is insurable. Here are some examples of documents that can present concerns:
- Deeds, wills and trusts that contain improper wording or incorrect names;
- Outstanding mortgages and judgments, or any liens against the property;
- Easements that allow construction of a road or utility line;
- Pending legal action against the property that could affect title; or
- Incorrect execution of documents.
Through the search and the examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful preventative work cannot locate all hidden title hazards.
Title Insurance Protects Against Hidden Hazards.
In spite of all the expertise and dedication that go into a title search and examination, hidden hazzrds can emerge after closing, resulting in unpleasant and costly surprises. Some examples of hazards include:
- A forged signature on the deed;
- An unknown heir of a previous owner who is claiming ownership of the property;
- Instruments executed under an expired or a fabricated power of attorney; or
- Mistakes in the public records.
Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims.
Your home is your most important investment. Before you go to closing, ask about your title insurance protection, and be sure to protect your home with an owner’s title insurance policy issued by Orlando Title Services, LLC.
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