What Is Title Insurance?

Title insurance protects the policy owner against loss in the event that the property’s title or legal ownership is something other than insured. It helps ensure that the property owner is assuming clear title for the real estate being purchased. Title insurance is different than other types of insurance in that it offers protection against past occurrences which could result in a claim as opposed to future incidents. Coverage continues for as long as you own the property.

Why should I purchase title insurance?

Title insurance is important because it protects you from liabilities that may arise from prior liens or issues with the property from previous owners, thus allowing you to use the property as you wish and sell it or secure loans with it. Without title insurance, you may be responsible for claims against your property due to errors in public records or title defects. With an owner’s title insurance policy, you are covered against claims and compensated up to the amount of the policy to settle claims.

What kinds of title issues could come up on a title search?

A title search can uncover liens such as unpaid property taxes, unsatisfied mortgages, judgments against buyers/sellers and any restrictions limiting the use of the parcel of land. However, there are other title defects that do not show up such as fraud, clerical errors, etc., which can also jeopardize your legal ownership.

How much does title insurance cost?

The cost varies based on the property value. However, you only pay once for the coverage which continues as long as you own the property. If you die, the coverage continues for your heirs. Also, if you sell your property and give warranties of title to the buyer, the coverage would continue. The cost of the policy also varies based on whether you select the ALTA standard policy or the Eagle enhanced policy.  The ALTA standard coverage addresses (but is not limited to): forgery and impersonation; lack of competency or legal authority of a party; inaccurate deeds; undisclosed (but recorded) prior liens; undisclosed (but recorded) easement or use restrictions; erroneous or inadequate legal descriptions; and deed not properly recorded.  The Eagle policy covers all of this plus (but is not limited to): claims for adverse possession; deed to land with buildings encroaching on another’s property based on an incorrect survey; mechanic’s or estate tax liens; pre-existing violations; post-policy forgery; and post-policy construction by a neighbor onto insured land.

Source: Monarch Title

The difference between equitable title and legal title

Do you know the difference between equitable title and legal title? Julie Nesbitt

Equitable title is conveyed to the buyer when the seller signs the offer to purchase. A ratified sales contract creates equitable title. After closing and accepting the deed, the buyer receives legal title.

Equitable title does not carry all the rights, privileges and duties of legal title, but equitable title is not without implication.  If a buyer has equitable title in a property, the seller cannot contract to sell the property to another buyer.  The equitable title protects the buyer’s interests in this regard, but does not obligate the buyer to pay taxes or maintenance on the property.

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