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1. Definition - Title Insurance? |
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2- If my title has been examined for
defects, why do I need Insurance? |
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3- If I am required to purchase
lender's insurance, why do I need owner's coverage as well? |
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4- Why should I have Owner's Title Insurance? |
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5- Are there different types of title
insurance? |
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6- How did Abraham Lincoln lose his home? |
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1- Definition - Title Insurance?
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Title Insurance is what you need to have the legal right to
possess, occupy and
sell your property without interference from others, subject
only to restrictions imposed by governmental authorities or
previous owners. In most cases, title is transferred by deed
which is recorded in the land records of the county in which
the property is located. Generally, when property is sold,
an attorney for the Buyer or a title examiner goes to the
record room and searches the land records for any title
defects. A title defect is anything in the entire history of
ownership of a piece of real estate which may encumber the
owner's rights under the title. A title defect may cause the
owner of real property to lose all or part of his land to a
superior ownership interest or claim of another. This is the
type of loss which title insurance protects against. In
short, if you own a title insurance policy, the title
insurance company will defend you, without cost, against an
attack or claim upon your ownership interest in your
property as insured and you will be protected against
financial loss caused by a title defect. |
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2- If my title has been examined for
defects, why do I need Insurance?
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There are many defects which even the most meticulous search
of the land records will not uncover: For instance, it is
impossible for an examiner to know whether the marital
rights of all previous owners have been relinquished;
whether all deeds, mortgages and judgments affecting the
property have been properly indexed in the land records;
whether all signatures are valid; or whether an unknown heir
of a previous owner had a valid claim against the property.
Without owner's title insurance you may have no avenue of
recovery for these types of problems. |
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3- If I am required
to purchase lender's insurance, why do I need owner's coverage as well?
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almost every instance, a lender will require you to purchase
lender's title insurance protecting it up to the value of
its loan on the property. This coverage only protects the
lender, not you, and the coverage diminishes as the loan is
paid off. As you build more equity in the property, you
expose yourself to a higher risk of loss occasioned by a
title defect. In this situation the protected lender will
suffer no loss while you as the owner of record bear the
substantial risk of the damage. Owners's title insurance
will protect you against any covered loss from failure of
title up to the full amount of the policy. |
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4- Why should I have Owner's Title Insurance?
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Owner's Title Insurance will protect you against hidden risks which would not be disclosed by even the most
meticulous search of the public records. Some examples of
hidden risks are:
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Forgery - Inadequate
surveys |
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Fraud in connection with execution of documents
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Incorrect legal
descriptions |
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Undue influence on a grantor or executor
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Non-delivery of deeds |
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False impersonation by those purporting to be owners of
property -
Unsatisfied claims
not shown on record |
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Incorrect representation of the marital status of grantors
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Deeds executed
under expired or false powers of attorney |
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Undisclosed or missing heirs
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Confusion due to
similar or identical names |
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Wills not properly probated
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Dower or curtsey
rights of ex-spouses of former owners |
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Mistaken interpretation of wills and trusts
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Incorrect indexing |
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Mental incompetence of grantors
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Clerical errors in
recording legal documents |
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Conveyance by a minor -
Delivery of deeds
after death of grantor |
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Birth of heirs subsequent to date of will |
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5- Are there different types of title
insurance?
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Yes.
There are three different types of Title Insurance. A
Lender's Policy, Standard Owner's Policy and the
Owner's Enhanced Policy. Lender's Coverage is
required by all corporate lenders as a condition of the
purchaser's loan. This covers only the lender for the amount
of the loan they are making to a borrower. The Lender's
Policy that the lender is provided with is the standard
ALTA 1992 Loan Policy. It provides coverage to the Lender
against such title encumbrances as fraud in connection with
the execution of document, incorrect representation of the
marital status of grantors, wills not properly probated, and
many other circumstances that might jeopardize the Lender's
security in the property. |
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The Standard ALTA 1992 Owner’s Policy protects you
as the owner of real property against fraudulently executed
documents, incorrect representations and improperly probated
wills as well as any unsatisfied claims that may not appear
in the County land records. |
The Owner’s Enhanced Policy covers you, the
owner against all that is included in a standard ALTA 1992
policy but with additional and enhanced coverage. Subject to
limitations, some of the benefits of an Enhanced Policy
include:
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Mechanic’s lien coverage is provided for work done prior to
the date of your policy. |
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Zoning coverage is now provided, insuring that your land is
properly zoned for a single-family residence. |
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Subdivision coverage is now provided in the event your land
is a portion of an improperly created subdivision. |
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Coverage is provided if you as the owner are forced to
remove an existing structure, other than a boundary wall or
fence, due to a previous owner’s failure to obtain the
necessary building permit. |
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Coverage is provided if an adjacent builder builds onto the
homeowner’s property without permission. |
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Coverage is provided for forgeries affecting your ownership
after the date that your title insurance policy is
issued. |
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