TITLE INSURANCE: WHAT’S IT MEAN?
Ok. This is probably the most boring part, but title insurance is something you really must have.
The point of owners title insurance is to secure your claim to the property and protect you against title defects, which are legal rights to a property claimed by someone other than the
owner. A title search involves learning the legal history of a property. This is done by researching public records to disclose the previous owners of record, prior deeds, mortgages, court judgments, probate proceedings and divorces, foreclosures, tax and construction liens, and other things that can affect title. If a title search reveals obvious defects, you can ask the seller to undertake legal proceedings to clear them up. Or, you can withdraw from the deal.
As part of the title search, the Title Company will list any “exceptions”—situations where the title owner relinquishes control over a given aspect of the property, as in phone lines running across the property or a shared driveway. Some of these exceptions will be apparent when reviewing the property survey.
Hidden defects can surface even after you’ve gone through closing. With title insurance, the title insurer pays the costs if you are forced to defend your ownership in court and covers any financial loss if the title defects are unfixable. Some examples of hidden defects include the following:
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