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Title Insurance.
It's a term we hear and see frequently -- we see reference
to it in the Sunday real estate section, in advertisements
and in conversations with real estate brokers. If you've
purchased a home before, you're probably familiar with the
benefits and procedures of title insurance. But if this is
your first home, you may wonder, "Why do I need another
insurance policy? It's just one more bill to pay."
The answer is simple: The purchase of a home is most likely
one of the most expensive and important purchases you will
ever make. You, and your mortgage lender, want to make sure
that the property is indeed yours -- lock, stock and barrel
-- and that no individual or government entity has any
right, lien, claim to your property.
Title insurance companies are in business to make sure your
rights and interests to the property are clear, that
transfer of title takes place efficiently and correctly and
that your interests as a homebuyer are protected to the
maximum degree.
Title insurance companies provide services to buyers,
sellers, real estate developers, builders, mortgage lenders
and others who have an interest in a real estate transfer.
Title companies routinely issue two types of policies --
"owner's," which cover you, the homebuyer; and "lender's,"
which covers the bank, savings and loan or other lending
institution over the life of the loan. Both are issued at
the time of purchase for a modest, one-time premium.
Before issuing a policy, however, the title company performs
an extensive search of relevant public records to determine
if anyone other than you has an interest in the property.
The search may be performed by title company personnel using
either public records or more likely, information gathered,
reorganized and indexed in the company's title "plant."
With such a thorough examination of records, any title
problems usually can be found and cleared up prior to your
purchase of the property. Once a title policy is issued, if
for some reason any claim which is covered under your title
policy is ever filed against your property, the title
company will pay the legal fee involved in defense of your
rights, as well as any covered loss arising from a valid
claim. That protection, which is in effect as long as you or
your heirs own the property, is yours for a one-time premium
paid at the time of purchase.
The fact that title companies work to eliminate risks before
they develop makes the title insurance decidedly different
from other types of insurance you may have purchased. Most
forms of insurance assume risks by providing financial
protection through a pooling of risks for losses arising
from an unforeseen event, say a fire, theft or accident. The
purpose of title insurance, on the other hand, is to
eliminate risks and prevent losses caused by defects in
title that happened in the past. Risks are examined and
mitigated before property changes hands.
This risk elimination has benefits to both you, the
homebuyer, and the title company: it minimizes the chances
adverse claims might be raised, and by so doing reduces the
number of claims that have to be defended or satisfied. This
keeps costs down for the title company and your title
premiums low.
Buying a home is a big step emotionally and financially.
With title insurance you are assured that any valid claim
against your property will be borne by the title company,
and that the odds of a claim being filed are slim indeed.
Isn't sleeping well at night, knowing your home is yours,
reason enough for title insurance?
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