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What is Title Insurance?

[ 0 ] August 13, 2010 |

Title Insurance is a Contract of Indemnity, meaning a promise by the title insurance company to pay the insured or take other action if the insured has a loss resulting from a covered risk.  The insurance under the contract is limited by the exclusion, exceptions, and conditions listed in the policy.  The title insurance company insures against actual loss resulting from any title covered by the policy, up to the policy amount and any attorney’s fees and expenses the title insurance company has to pay under the policy.

Basically, it protects the insured from covered losses as the result of claims on one’s ownership of land.  For instance, a seller may forge a signature of another, creating a loss for a new owner.  Other problems that can occur include:

  • Fraud
  • Improper Court Proceedings
  • Recording Mistakes
  • Missing Heirs
  • Unfilled liens
  • Incompetence of previous seller(s)

Types of Title Insurance

Commitment for Title Insurance

The title insurance company’s promise to issue the title insurance policy

Mortgagee Policy of Title Insurance

Indemnifies lenders against loss or damage suffered by reason of the invalidity of, or impairment of, the insured lien

Mortgage Title Policy Binder on Interim Construction Loan

Issued to lenders on a construction loan only. A Mortgagee Title Policy Binders is not a policy of insurance; however, the title insurance company commits to the insurance of a Mortgage Policy for a period of one year upon payment of the applicable premium.

Residential Owner Policy of Title Insurance

Issued only on a property that is residential real estate property at the date the policy is issued.  In all other cases, the title insurance company shall issue the regular Owner Policy

Owner Policy of Title Insurance

Indemnifies against loss resulting from title risk covered by the policy.

GAP COVERAGE

This endorsement gives coverage against intervening adverse matters affection title which are recorded or filed between the date of commitment and the recording of documents.

Category: Buyers, Sellers

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