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Title
insurance protects the owner from financial loss in the event problems
arise regarding the ownership of the property. This is called the
Owner's Policy. Even with the most careful title search, there may
be hidden title defects. The policy is designed to protect you from
any title defects that existed before the issue date of the policy.
Title insurance will also pay the cost of defending against any
covered claim. This is typically purchased by the seller.
Your
lender will probably require you to purchase a Lender's Policy as
well. This protects the lender, not you. The Lender's Policy insures
that the lender has a valid, enforceable lien on the property. This
is typically purchased by the buyer.
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Examples
of Title Defects are:
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Creditor
Claims |
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Deeds
executed under false or expired powers of attorney |
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Mistaken
interpretation of wills and trusts |
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Incorrect
representation of marital status |
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Undisclosed
heirs |
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Mistakes
in recording legal documents |
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Incorrect
legal descriptions |
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Forged
deeds, releases, etc. |
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Federal,
state inheritance and gift tax liens |
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Errors
in tax records |
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Federal
condemnation without notice filing |
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Capacity
of foreign fiduciaries |
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Duress
in execution of documents |
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Want
of jurisdiction over persons in judicial proceedings |
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Deeds
from minors or non-existent entities |
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Discovery
of later will after probate of first will |
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Easements
of prescription not discovered by a survey |
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Deeds
delivered after the death of grantor or grantee, or without
consent of grantor |
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