Almost everyone is familiar with some form of insurance coverage: insurance coverages on your car, your life, medical/dental insurance or fire insurance on your home. But what exactly is "title" insurance?
Title Insurance is information on the status of title to real property before the purchase or mortgage of real property and protection against adverse claims that may affect the title. Here is how it works:
Before the closing of a loan or sale takes place, the public records are searched and examined to determine ownership, limitations to that ownership, encumbrances and any adverse matters affecting title to the property. These records are searched by examining the official courthouse records, where all recorded documents, judgments, liens, tax assessments (such as street or sewer), special taxes, and other matters, such as divorce and bankruptcy, are filed. The results of this examination will then be provided in a preliminary title report or "commitment" to insure the property. A commitment is a binding contract which reflects the current status of title before a loan or sale is closed and binds the Company to issue its title insurance in favor of the insured as owner or mortgagee of the property being searched, subject to certain conditions and stipulations. If there are serious problems found in the chain of title the title insurer will report those matters and also exclude them from coverage. Buyers and lenders know there are some limitations which should be removed such as the paying off and release of a prior mortgage or judgment. Otherwise, they will continue to adversely affect the property and the priority of their interests after closing. Sometimes problems are discovered and a title company may choose to "insure over" the matter in order for the transaction to proceed as planned.
I want to know more regarding this Title Insurance I want to know what are the risk factors that are covered under this heading.
