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What is title insurance and why should I purchase an owner's policy if there has been a title search done on the property?
Although title searches are performed by experienced title examiners, a title search is simply a search of public records and substantial defects may not be discovered.
An owner's policy of title insurance is a contract that protects you, according to the contract terms, against loss or damage due to title defects. This contract is backed by the known assets and reserves of the title insurance underwriter and serves as a written guarantee that your underwriter will undertake, at its own expense, the defense of your title in all legal actions or proceedings alleging the title to be other than as insured.
For a one-time premium, paid during the closing process, an owner's policy of title insurance protects against future losses arising out of events that may have happened in the past.
So what does title insurance protect against?
TO NAME A FEW:
- Mistakes in recording of legal documents
- Forged deeds, releases or wills
- Undisclosed or missing heirs, including spouses
- Deeds by persons of unsound mind
- Deeds by minors
- Deeds executed under invalid/expired power of attorney
- Liens for unpaid taxes
- Fraud
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