Relevant to Taos Real Estate News Articles
Why Do You Need Title Insurance?
- LandAmerica Title Company
Title insurance. It's a term we hear and see frequently-we see reference
to it in the Sunday real estate section, in advertisements, 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 the property is indeed yours-lock, stock, and
barrel- and that no individual or government entity has any right, lien,
claim, or encumbrance to your property.
Title insurance companies are businesses to make sure your rights and interests
to the property are clear, that the transfer of title takes place efficiently
and correctly and that your interests as a home buyer 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
real estate transfer. Title companies routinely issue two types of policies-
"owner's," which covers you the home buyer; 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 the risks and prevent losses
caused by defects in title that happened in the past. Risks are examined
and mitigated before property changes hands.
The risk elimination has benefits to both you, the home buyer, and title
company: it minimizes the chances adverse claims might be raised, and by
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?
WHAT DOES TITLE INSURANCE DO FOR YOU?
Q. What is title insurance?
Title insurance is an insurance policy that protects your legal rights to
own, possess, use, control, and dispose of land.
Q. Why is transferring the title to real estate different from transferring
the title to other items such as a car?
Transferring a real estate title can be complicated because land is permanent
and the usage of land and the rights to use it can change over the years.
Q. What is a title search?
A title search is a detailed examination of the historical public records
concerning a property. These records include deeds, court records, property
and name indexes, and many other public documents.
Q. Why do I need title insurance?
There are two types of title insurance policies: a lender’s policy
and an owner’s policy. The lender’s policy is required for a
mortgage, financially covers the amount of the loan, and provides protection
to the lender. An owner’s policy protects the land owner against any
title loss, which ensures the value of the property. With title insurance,
if a claim is made against the title, the underwriter must pay any and all
costs associated with defense against the challenge, and if unsuccessful
in that defense, reimburse the land owner for any reduction in the value
of the land.
Q. Is title insurance as important as homeowner’s insurance?
Homeowner’s insurance typically provides protection against theft
or damage. If a fire destroys your home, you can rebuild and buy new possessions.
If the title to the land fails, you could lose the right to inhabit your
home, as well as the land it occupies.
Q. How much does title insurance cost?
Title insurance charges vary in different parts of the country. However,
you pay for a [owner’s policy of] title insurance only once; there
are no monthly premiums.
Q. How long does title insurance coverage last?
The lender’s policy of title insurance lasts until the mortgage is
paid in full. An owner’s policy of title insurance lasts for as long
as you or your heirs retain an interest in the property.
Please call the Lora Company at (575) 758-3275 if we may answer any questions about title insurance or offer any other assistance.
