Title insurance provides protection from "hidden risk", due to unforeseen claims that may be asserted to your property. The policy provides protection from financial loss and payment of all legal cost to defend title claims.
Title Insurance is an extremely important element of your closing. There is a lot to know and understand. We encourage you to take the time to educate yourself about Title Insurance by clicking the link below. If after reviewing the link you still have questions, please give us a call. We are here to answer any questions you may have.
When you purchase your home, how can you be sure that there are no problems with the home's title and that the seller really owns the property? Problems with the title can limit your use and enjoyment of the property, as well as bring financial loss. That is what a title search and title insurance are for.
Even though a title search may be extensive and exacting, it is limited to public records, so the possibility of "hidden risk" remains. This is where Preferred Title comes in. Records may not reflect claims of missing heirs, false impersonations, forgeries, improperly probated wills or clerical errors in recording legal documents, so without title insurance your investment is at risk. But the risks don't stop there. Confusion due to similar or identical names, deeds executed under expired or false powers of attorney, unsatisfied claims not shown in the records and mistaken interpretation of wills and trusts are just a few of the hidden risks that make the purchase of title insurance and a thorough title search a most prudent one-time investment.
Title insurance rates are set and regulated by the State of Virginia, Bureau of Insurance. You only pay the premium once. The cost depends upon the purchase price of the property (owner's policy), and the loan amount (lender's policy). Quotes available upon request.
There are two types of title insurance policies that you need to be aware of:
1) Owner's Title Insurance Policy
2) Enhanced Owner's Title Insurance Policy
Title insurance is different from other types of insurance in that it protects you, the insured, from loss that may occur from matters or defects from the past. Other types of insurance such as auto insurance, life insurance or health insurance, cover you against losses that may occur in the future. Title insurance does not protect against a defect that may originate at a later date.
There are numerous defects or problems that can arise to cause an attack or loss of the title to your property. Some of these include problems not disclosed by the most careful search of the public records (the title search). Hidden risks can cause a total loss of your investment or heavy legal expenses in the defense of a claim.
Some title problems may show up months or years after the original purchase of the property. The following are examples of some of the matters that can cause loss of title or an expensive lawsuit:
Title insurance defends you in a lawsuit attacking your title and either corrects the title problem or pays the insured's losses up to the face amount of the policy. The policy also protects you after you sell the property, for defects occurring prior to your ownership that cause a loss to a purchaser if the title was warranted by you.
The title policy guarantees that at the date the deed was conveyed in the name of the insured, the title was free of defects apart from those "excepted to" in the policy.
It's easy!, Contact Preferred Title & Settlement Services, here or by phone at 804-741-2500. This is only an introduction to title insurance. The exact terms and conditions of coverage are provided in your policy.
Lender's Policy - a Lender's Policy only covers the lender in the amount borrowed. Lender's insurance is required by the mortgage company.
Owner's Policy - an Owner's Policy insures the purchaser for as long as they or their heirs have an interest in the property. Title policies are normally issued in the amount of the purchase price.
Enhanced Owner's Policy - by choosing an Enhanced Owner's Policy, you are protecting your home and land for the future. Ask your Settlement agent about all of the benefits of the Enhanced Policy.
Title insurance defends your investment against claims on your property. Under this policy, your insurance will pay for the defense of your property, as well as pay valid claims against title. Your insurance coverage extends to those hidden hazzards that cannot be detected by a thorough title search. Some defects will emerge during the purchase of the property, while others might not make themselves known until long afterward.
By investing in the Enhanced Homeowners Policy, you not only protect your property up to the time of purchase, but also insuring your investment for the future. Contact Preferred Title for more details on how an Enhanced Policy can help you.
Some of the benefits included in the enhanced policy are:
After your sales contract has been accepted, a title professional will search the public records to look for any problems with the home's title. This search typically involves a review of land records going back many years. More than 1/3 of all title searches reveal a title problem that title professionals fix before you go to closing. For instance, a previous owner may have had minor construction done on the property, but never fully paid the contractor. Or the previous owner may have failed to pay local or state taxes (See below for some other common title problems). Title professionals seek to resolve problems like these before you go to closing. What happens if a problem arises after you move in? Read on. (If you are refinancing, scroll down or click here to jump ahead and learn more about what you can expect.)
Sometimes title problems occur that could not be found in the public records or are inadvertently missed in the title search process. To help protect you in these events, it is recommended that you obtain an Owner's Policy of Title Insurance to insure you against the most unforeseen problems.
Owner's Title Insurance, called an Owner's Policy, is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and lasts for as long as you or your heirs have an interest in the property. Only an Owner's Policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include:
There are two types of title insurance: Owner's title insurance, as mentioned above, and Lenders title insurance, also called a Loan Policy. Most lenders usually require a Loan Policy when they issue you a loan. The Loan Policy is usually based on the dollar amount of your loan. It only protects the lender's interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off.
Prices vary from state to state. Be sure to ask your settlement or title company about pricing and whether the Loan Policy and Owner's Policy are sold separately or together. Find a list of ALTA member companies who can conduct your closing and issue you an Owner's Policy.
Here are three short stories on some common title problems:
Fraud & Forgery
Those involved in real estate fraud and forgery can be clever and persistent, which can spell trouble for your home purchase.
In a western state, an innocent buyer purchased an attractive home site through a realty company, accepting a notarized deed from the seller. Then another couple, the true owners of the property — who lived in another locale — suddenly appeared and initiated legal action to prove their interest in the real estate was valid. Under the Owner’s Title Insurance Policy of the innocent buyer, bought for a one-time fee at closing, the title company provided a money settlement to protect against financial loss. As it turned out, the forger spent time in advance at the local court house, searching the public records to locate property with out-of-town owners who had been in possession for an extended period of time. The individual involved then forged and recorded a deed to a fictitious person and assumed the identity of that person before listing the property for sale to an innocent purchaser, handling most contacts through an answering service. Also, the identity of the notary appearing on deeds was fictitious as well.
Fraud and forgery are examples of hidden title hazards that can remain undetected until after a closing despite the most careful precautions. Although emphasizing risk elimination, an Owner’s Policy protects you financially through negotiation by the insurer with third-parties, payment for defending against an attack on the title as insured, and payment of valid claims.
Conflicts over a will from a deceased former owner may suggest a study topic for law school. But the subject can take on a reality dimension and all too quickly your home ownership is at stake.
After purchasing a residence, the new owner was startled when a brother of the seller claimed an ownership interest and sought a substantial amount of money as his share. It seemed that their late mother had given the house to the son making the challenge, who placed the deed in his drawer without recording it at the court house. Some 20 years later, after the death of the mother, the deed was discovered and then filed. Permission was granted in probate court to remove the property from the late mother’s estate, and the brother to whom the residence initially was given sold the house. But the other brother appealed the probate court decision, claiming their mother really did not intend to give the house to his sibling. Ultimately, the appeal was upheld and the new owner faced a significant financial loss. Since the new owner had acquired an Owner's Policy of Title Insurance upon purchasing the real estate, the title company paid the claim, along with an additional amount in legal fees incurred during the defense.
When buying a home, it's important to remember what you don't know can cost you.
A couple purchased a residence from a widow and her daughter, the only known heirs of the husband and father who died without leaving a will.
Soon after the sale, a man appeared - claiming he was the son of the late owner by a former marriage. As it turned out, he indeed was the son of the deceased man. This legal heir disapproved of his father's remarriage and had vanished when the wedding took place. Nonetheless, the son was entitled to a share of the value of the home, which meant an expensive problem for the unwary couple purchasing the property.
Although the absence of a will hindered discovery of the missing heir in a title search of the public records, an Owner's Policy of Title Insurance issued for a one-time fee at the time of the real estate transaction would have financially protected the couple from the claim by the missing heir. For a one-time charge at closing, an Owner's Policy will safeguard against problems including those even an exhaustive search will not reveal.
An Owner's Policy is necessary to fully protect a home buyer. Lender's title insurance, which is usually required by the mortgage lender, serves as protection only for the lending institution.
Escrow is the holding of assests by a third party until certain conditions are met. In real estate, an escrow company holds the seller's deed and the purchaser's money until all terms of the sale are completed.
However, Preferred Title does much more than simply hold the deed and purchase money. Our reponsibilities include making certain the title is insurable, as well as recording the deed and other necessary documents with the courts. We will also pay various Settlement expenses such as the agent's sales commission, appraisal fee, transfer fee, and the seller's mortgage balance, as well as other tasks.
Construction of a new home raises special title problems for the lender and owner. You may think you are the first owner when constructing a home on a purchased lot. However, there were most likely many prior owners of the unimproved land. A title search will uncover any existing liens and a survey will determine the boundaries of the property being purchased. In addition, a builder may have failed to pay subcontractors and suppliers. This could result in the subcontractor or supplier placing a lien on your property. Again, lenders want to be sure the property has clear title, and they are insuring the correct property. Purchasing an Owner's Policy will protect you against these potential problems and pay for any legal fees involved in defending a claim.
1100 Welborne Drive, Suite 104 Henrico, Virginia 23229