Title Insurance: Some Basic Facts!

By | March 13, 2015

Title Insurance: Protects the property owner from an undiscovered issue THAT HAS HAPPENED IN THE PAST where most other insurance lines protect the purchaser from some future event!

If you are financing a home or refinancing an existing mortgage the lender will require a title policy, known as the Loan Policy, to protect the collateral securing the money they are lending to you. This policy will NOT be an option!

An Owner’s Policy, while not always an automatic occurrence at closing, is critical protection for the property owner in the event some unforeseen or undiscovered claim or lien on the property from the time before the closing has taken place arises.

The article ‘The Cost of the Owner’s Policy‘ courtesy of Old Republic Title and Heather Thompson Twardus, goes into a much deeper discussion of the how and why of title insurance.

The majority of the one-time title insurance premium covers the cost to discover, identify and repair issues caused by events that occurred in the past. Because of these preventive measures, title insurance is fundamentally different from all other forms of insurance, which charge annual premiums to provide insurance protection for future events. The curative work performed by title agents minimizes the fear, disruption and distress that title claims have on homeowners.

One way to compare title insurance to other lines of insurance is to imagine if a homeowner’s insurance agent came into a home and inspected all of the wiring at no additional cost to the owner.

The agent then repaired any and all faulty or frayed wiring at no cost and guaranteed that none of the wiring that was repaired or any wiring that the agent could not see, would cause a fire. Finally, the agent charged a one-time fee for the inspection, repairs and guarantee that would be in effect as long as you or your heirs owned the property.

The title industry finds the faulty wiring, fixes the faulty wiring and charges a one-time premium to guarantee its work, based on the value of the property. When property changes hands in the United States, it is through a private contract that is recorded in the public record. No matter the type of purchase, but especially a foreclosure, it is important that all documentation is in order.

Commitment to accuracy and quality assurance is the foundation of title insurance. This commitment ensures fewer problems for homeowners and provides assurance that they won’t lose their investment.

Consumers have a choice when shopping for a provider of their title insurance related services. When selecting a title insurance provider, consumers should always consider the company’s local expertise, service standards, market conduct and commitment to the local community. Consumers should also consider and compare all of the associated costs.

Some rates may or may not include other services provided by the title company such as conducting the closing, preparing and notarizing documents and other services. When comparing one rate to another, be sure to get detailed information on what is included in that rate, so you are comparing equally.

Asking questions can help the next time you buy or refinance a home.

When refinancing with your existing lender, ask for a copy of your original lender’s title insurance policy. When purchasing a home, ask your real estate agent or the home seller for a copy of any existing owner’s title insurance policy written on the property.

When placing a title order, provide your settlement agent or lawyer with a complete, legible copy of any prior title policies.

Finally, ask your settlement agent or lawyer if any discounted title insurance rates are available based on your situation. Title insurance and related services are regulated at the state level, so keep in mind that the process can vary from state to state and even from county to county. Be sure to ask how it’s done in your area so you know what to expect.

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Michael Haltman, President of Hallmark Abstract Service, New York.

HAS is a provider of title insurance in New York State for residential and commercial real estate transactions.

And, for anyone either buying a property or refinancing, remember that although your attorney will likely recommend a title insurance provider you always have the right to choose your own (click here to learn more)!

If you have any questions you can reach Michael by email at mhaltman@hallmarkabstractllc.com.

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