Article courtesy of Insurance Community
All of us cherish to have our own home… “Home… sweet… Home”. But only being an owner is not enough. I need to perform my task as an efficient home owner. I have to protect my home from heat, light, rain and all other perils as my home protects me from all disasters. But for me to protect my home, the best way is to insure my own home. But is the home I purchased really my own home? Am I really the owner of the property? These are the questions that many a times creep up. This mainly happens if there is a dispute in the legal documents about the ownership of the home over time. To protect ourselves from such ownership disputes, we, the home owners can sign up with the title insurance policy.
What is a title insurance policy?
Title insurance is a security policy that covers all losses you may suffer due to the title of the property. Your home might have undergone several ownership changes before you have purchased it. There might be some legal complications regarding the actual owner of your property. May be someone might have forged a signature while changing the title .Or there may be pending unpaid tax issues. Title insurance assures you complete security against any such mishaps. The company promises to reimburse you for any legal fees related to such issues.
What does the title insurance cover?
The basic three things that title insurance covers are: Owners, Lender’s and Extended Coverage.
What does basic owner’s title policy cover?
1. Forgery, fraud
2. Title of the property
3. Encumbrances or judgments
4. Restrictive covenants
5. Defective recordation
6. Invalid signatures on documents
What does basic lender’s title policy cover?
1. Defects and other unavailable documents
2. Mechanic’s liens and unrecorded liens
3. Unavailable easements and access rights
What does the extended owner’s policy cover?
1. Subdivision maps
2. Covenant violations from previous owners
3. Violation of building permit rules of the previous owners
4. Damaging Structure from mineral extractions
5. Living trusts
6. Variety of encroachments and forgeries after title insurance is issued
How does it help me?
Title insurance is not compulsory by law but every mortgage lender would value a title insurance policy while they grant you a loan.
How does it work?
Generally title insurance pays for all those losses that you would have to suffer for the consequences that have occurred much before the date of the policy. The coverage in that terms ends from the time the policy have been issued and extends back to an undefined time.
How long does the policy last?
Your policy would last till you as the owner of the property, or any of your inheritors have any problem with the property. And now if you sell it, the immediate owner would have to purchase a new policy.
Would the title insurance protect me against any false claims that arose after I purchased the property?
In normal terms a standard policy does not.
Would my title insurance rise with the rise of my property value?
No, but if your property increased in value you have an option to purchase an extra coverage on the same policy just by paying an extra fee. And the extra coverage would be counted from the date of purchase of the original policy.
Is a title insurance policy affordable for a low income borrower?
Yes. The title insurance premium is cost effective and very much affordable by the low income borrower.
Am I guaranteed that I would be able to sell my property if an unforeseen claim rises?
It might be possible that you would not be able to sell a property till the claim is settled by the insurer
Can I purchase title insurance on my own?
Yes you have the right to purchase it on your own. However in most cases people leave it up to the agent, lender or the attorney.
Limitation of title insurance
The insurance would assure you security up to the amount of the mortgage but it does not protect your equity in the property. For this the owner of the property would require to have a title policy for the full value of the home.
However the policy features and premium rate greatly varies from state to state.
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Contact the Jeffrey Team for more information – 416-388-1960