What is Title Insurance?

Buying a new home is one of life’s most gratifying experiences and might be the biggest investment you will ever make. As you approach closing day, however, all those details can be overwhelming. It’s easy to overlook the single most important step in the entire process – the purchase of owner’s title insurance.

When you purchase a home, you assume title to the property. Title is the legal right that a person has to the ownership and possession of land. However, there can be any number of prior title problems that remain undisclosed even after the most careful search of public records, such as: tax liens, forged signatures in the chain of title, recording errors, title search errors, and claims by missing heirs and/or ex-spouses.

Nothing Provides Peace of Mind Quite Like Title Insurance

Title insurance is about protecting your home, your family and yourself. It is about preventing a mishap or lessening the severity of its impact..

An owner’s title insurance policy protects you from actual financial loss caused by a covered matter involving the title to your property. Your title insurer also has a duty to defend your title in legal matters arising from a covered claim you make under the policy. That same coverage and protection also extends to your heirs, for as long as they own the property.

Title insurance protects you against future loss if a covered claim against your property is ever made.

Why is Title Insurance the Best Option for you?

Title insurance is a policy that provides protection against serious financial loss due to a defect in the title to the property purchased. The policy covers any valid claim made against the insured's title, and pays for the costs and legal expenses of defending against a title claim.

Title insurance differs significantly from other types of insurance. The functions of most other forms of insurance is risk assumption through the pooling of risks for losses arising out of unforeseen future events (such as death or accidents), while the primary purpose of title insurance is to eliminate risks and prevent losses caused by defects in title arising out of events that have happened in the past. To achieve this goal, title insurers perform an extensive search of the public and private records, combine the results of the search into an abstract and the abstract is sent to a title attorney to determine whether there are any adverse claims to the subject real estate. Those claims are either eliminated prior to the issuance of a title policy or their existence is excepted from coverage.

Buyer Benefits

The purchaser of real estate needs protection against serious financial loss due to a defect in the title to the property purchased. For a single, one-time premium, which is a modest amount in relationship to the value of the property, a buyer can receive the protection of a title insurance policy – a policy that is backed by the reserves and solvency of the Company. A title insurance policy will cover both claims arising out of title problems that could have been discovered in the public records, and those so-called “non-record” defects that could not be discovered in the record, even with the most complete search.

Lender Benefits

The overwhelming majority of mortgage loans made in the United States are made by persons who are acting in a fiduciary capacity – by savings and loan associations, savings banks, and commercial banks on behalf of their depositors, and by life insurance companies on behalf of their policyholders. Because they are lending other people’s money (other people’s savings or policyholder’s funds) these lenders must be concerned with the safety of their mortgage investments.

A policy of title insurance provides a mortgage lender with a high degree of safety against the loss of security as a result of a title problem. This protection remains in effect for as long as the mortgage remains unsatisfied. Most lenders require a lenders title insurance policy.

Seller Benefits

An owner of real property whose interest is insured by an owner’s title insurance policy has the assurance that the title will be marketable when selling the property. The title insurance policy protects the seller from financial damage if the seller’s title is rejected by a prospective purchaser. Also, when the seller conveys with “warranties,” the seller is still protected if the buyer sues because of a breach of those warranties.

Title Insurance Policy Process

Frequently Asked Questions

Title insurance protects the buyer / lender’s interest in the property. This could include title problems such as: unfiled or unpaid liens, inadequate legal descriptions, mistakes in legal documents, fraudulent deeds or mortgages etc. Title insurance is a one time fee collected at closing and protects the buyer / lender from the day of closing backwards, unlike other insurance policies that protect one year forward and renew each year.

The title insurance premium is calculated from the sales price (owner’s policy) or loan amount (lender’s policy) – whichever amount is more, off of a risk rate sheet provided by title’s underwriter. The second policy (owner’s or lender’s policy) is issued at a discounted simultaneous rate, making the second policy a flat $50.00. Most lender’s require title insurance, so most buyers can receive coverage for the flat $50.00 rate, what a steal!

Typically, title insurance is a buyer fee, but all fees are negotiable in real estate. The most commonly used contract in our state is the Oklahoma Real Estate Commission contract, and contained in the contract states the buyer pays their own title insurance.

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