What is Title Insurance? And Why is it Needed?
The role of the title company is protecting purchasers and lenders against loss. Simply explained, “title” is the right to own, possess, use, control and dispose of property. Therefore, protecting purchasers and lenders against loss. Consequently, this is accomplished by the issuance of a title insurance policy.
The Role of the Title Company. Who is Covered?
Typically, there are two policies issued. There is the Lender’s policy, which insures the lender for the amount of the loan. Coupled with, the Owner’s policy, which insures the purchaser for the purchase price.
How is Title Insurance Different Than Other Types of Insurance?
By and large, the function of most other forms of insurance is risk assumption through the pooling of risks for losses arising out of unforeseen future events. Such as, sickness or accidents. Comparatively, the primary purpose of title insurance is to eliminate risks and prevent losses. By and large this could be caused by defects in title arising out of events that have happened in the past.
On the whole, to achieve this goal, title insurers perform an extensive search and examination of the public records. Altogether, this is done to determine whether there are any adverse claims such as, title defects, attached to the subject property. Thus, said defects or claims are either eliminated prior to the issuance of a title policy or their existence is excepted from coverage.
What is Involved in a Title Search?
For the most part, a title search is done to determine that the person who is selling the property actually has the right to sell it. Additionally, the search is done to make sure the buyer is is purchasing the correct parcel of land. Another reason for a title search is to look for possible defects in title.
To sum up, a title search is really made up of three separate searches. To start, chain of title will tell you the history of ownership on the subject property. Identically, a tax search reveals the status of the taxes and assessments. Likewise, a judgment and name search, searches for judgments and liens against the owner’s and purchaser’s name.
How Does Title Insurance Protect You?
In the long run should there be a claim made against your title as covered by your policy, then, it is the title company’s obligation to protect you. In a word, they would have to defend your title in court if necessary. By the way this is done at the insurer’s expense. Comparatively, bearing the cost of settling the claim should it prove to be valid. In conclusion this is all done in order to perfect your title and keep you in possession of your property.
If you would like information on buying or selling a home in an active adult community call us! 480-809-5759. Or click here. The Kolb Team. Your Arizona’s active adult community experts.
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