Can I purchase Title Insurance?

Yes. Most buyers leave it up to the real estate agent, lender or attorney, however, this may be a mistake. If the real estate agent, the lender, or the attorney owns a title agency then there could be a conflict of interest. In some states, attorneys can be dis-barred if they refer title insurance from their own law firm to their own title insurance agency. The Virginia State Bar Association considers it a conflict of interest. If the bar association considers it a “conflict”, maybe you should consider using a neutral title insurance agent. If your real estate agent, lender or attorney owns a title agency, it is probably a good idea to get a (neutral) third party to act as the title insurance agent.

NOTE: Ask yourself: Do they have an interest in directing my business? Is it advantageous to them, are they making money from any other part of this transaction? If there is an issue that arises at settlement who does the settlement officer represent? Do they represent me, or do they represent the real estate agent that owns the company? (The same company that employs them.) When it is your money on the settlement table you had better be sure you know the answers.

Can I shop for Title Insurance? Is it worth it?
Yes. Insurance premiums are the same for all title insurance agents in “rating bureau states”, such as Pennsylvania and Virginia. To charge any other rate is a violation of law. However, there is some flexibility in title-related charges such as a settlement fee. Title insurance rating bureaus file for approval of a single rate schedule for all carriers throughout each state. The department of insurance in each state then approves the rates. Once this happens the rate is set and not negotiable. It is a good idea to shop the area where the property is located. Ask about notary fees, fed-ex fees, tax cert fees and closing fees. Recording fees vary from county to county.
Do I need Title Insurance for a newly constructed home?
Title insurance insures the land that the new house sits on. Even if the house hasn’t been occupied, the land has been sold and re-sold over many years. A title insurance policy insures your title to that piece of property. It insures your rights to the property. It insures that the builder has given you “free and clear” title to the property and that there are no easements or mechanics liens affecting your property that could hurt you at a later time.
Does the lender's Title Insurance protect me?
No, the lender’s policy insures only the lenders interest in your property. A lender’s policy of title insurance protects the lender that financed your property. It insures them against a loss caused by defects in the owner’s title. You would lose your equity if you did not have an Owner’s Title Insurance policy.
Does Title Insurance do anything for me?
The lender required insurance protects the lender up to the amount of the mortgage, but it doesn’t protect your equity in the property. For that you need an owner’s title policy for the purchase price of the home. The buyer must buy it as an add-on to the lender policy. It is advisable to do this because the additional cost above the lender policy is small.
Doesn't a search of public records determine if there are defects with title to my property?
Sometimes, but not all defects are revealed by a search of the public records. If a problem arises which was the result of a mistake made during the search, or if a defect exists which is not of public record then your title policy reimburses any losses that you sustain.
How does Title Insurance protect me?
An owner’s title insurance policy protects a buyer against defects in the title of the property. It will provide coverage for either clearing the title problems or it will pay you for your losses. You pay a one-time premium at closing and an owner’s title insurance policy remains in effect as long as you own the property. A title insurance policy insures the title to property for buyers and lenders. It provides protection from any loss arising from errors in the title search and examination and or recording of documents at the courthouse. It also allows for payment of your attorney’s fees to clear any title defects that may arise.
How is a title related to real estate?
First you must understand what the title is, only then, can you understand why you need title insurance. The title is the ownership of the property. It is a history of the property and it reflects previous deeds, mortgages, easements, judgments, and other possible liens, including rights or privileges previously granted to others. A past or present owner may have granted these rights. Such rights or privileges could include easements, licenses, rights of way, or mortgages.

If there is an issue with the title to the property, you may not be getting what you are paying for. You could lose your land. Unpaid taxes, for example, are a lien filed by the tax collector or tax claim bureau for unpaid taxes. If these taxes are from a tax period when a previous owner owned the property, you may still be responsible to pay them. Another example could be a roofer that put a roof on right before you purchased the property. They could make a claim against you because the previous owner did not pay. Someone who worked on the house, or any of countless other situations could cause a major problem. If a mortgage was not paid off at settlement you could have a real problem. Even if you know you are not responsible for the mortgage amount you still have to hire an attorney and pay the attorney’s fees to prove you are right. This is why it’s important to have title insurance!

Title insurance is insurance that protects you against unknown problems with your title. It protects you against losses you may suffer due to title problems such as mortgages, judgments, liens or other matters in the public record. A title insurance agent will perform a title search to determine what is on the public record that may affect your title. It will eliminate your risks caused by undisclosed title issues. The searcher will search the public records to trace the chain of title to your property. He/she will identify any outstanding claims or possible problems that could arise later. Once these problems have been eliminated then the title agent will issue a title insurance policy insuring that you have clear title to your property. Title insurance is a one-time fee for the policy. The policy is good as long as you own the property and will even protect you after you have sold the property.

Mortgage lenders always require a title insurance policy. A lender’s policy protects the lender against any title defects that may negatively affect the lenders lien on a property. There are two types of title insurance policies. The first is the owner’s policy. This guarantees that you own the property. The second is the lender’s policy and this guarantees that the lender has a good lien on your property. This means if you sell the property you must pay off the lender. The lender’s policy and the owner’s policy are two separate policies. You pay a one-time premium for both. In other words you are not paying for two policies. An example would be: you buy a house for $410,000.00 and you borrow $250,000.00 from a mortgage lender; you pay for the $410,000.00 owners policy and the lenders policies is issued to the lender at no additional cost to you. The homebuyer usually pays the policies.

How serious could a claim to my property be?
A claim could be very serious; you would be responsible for all legal fees and costs involved in defending your property. It could even result in the loss of all the equity in your property or worse, you could lose the entire property.
Is purchasing Title Insurance obligatory?
All mortgage lenders require title insurance to cover the loan amount. It lasts until the loan is repaid. As with mortgage insurance, it protects the lender but you pay the premium, which is a single payment made upfront usually at the closing.
Is Title Insurance a one time cost?
Yes, you pay it one time at closing. Then you’re covered for as long as you own your home.
What are some common hidden title issues?

Even after conducting a title search there may be some hidden title problems. Not all title problems will appear in the public records. All of the issues listed below can make your title worthless. A title insurance policy can protect you from a loss caused by a title claim.

Here are some examples of why it’s important to buy title insurance:
1) Fraud: Someone represents that they are the true owner of the land, but they are not.
2) Forgery: Someone has given a forged deed.
3) A bad Power of Attorney: a person claims to have “power of attorney” but does not have the legal authority to act for another person; or, the power of attorney has expired; or, the power of attorney is not properly executed and/or notarized.
4) Delivery of a deed after the death of the grantor, without the pre-written consent of the deceased.
5) Estates/Wills not properly probated.
6) It is discovered that a will isn’t legally valid.
7) Mistaken interpretation of a will.
8) Un-disclosed or missing heirs.
9) Birth of heirs after the date of the will.
10) Surviving heirs were omitted from a will that involved the property.
11) There is an undisclosed divorce of a spouse who claims to be an heir.
12) Mis-representation of marital status.
13) Dower or curtsy rights of ex-spouse or past owner.
14) A deed is to, or from, a defunct corporation.
15) Deeds made by minors.
16) Undue influence over the grantor (duress).
17) Mental incompetence of a signer on a deed/mortgage.
18) Non-delivery of deeds.
19) Deeds were made by non-citizens.
20) Erroneous reports were furnished by tax officials.
21) There are errors in tax records.
22) Mistakes were made in recording legal documents.
23) Incorrect indexing.
24) Confusion due to similar or identical names.
25) Falsified title records.
26) Unsatisfied claims not shown on the public record.
27) Representations on legal documents (e.g., Notary seals) are invalid or incorrect.
28) A deed incorrectly identifies public property as private property.
29) The property was condemned but there is no official record of the condemnation.
30) Incorrect legal description.
31) Easements exist that were not located by a survey.
32) Inadequate surveys.

What happens on settlement day?
1) If you are the buyer you should do a walk-through of the property you are buying. This is to ensure the seller has taken all of their belongings and cleaned the house. Check for damage that you have not seen before. Also, take readings from all the utility meters (electric, gas, water) depending on where the property is located these may be prorated on the HUD-1 settlement statement.
2) Meet with the settlement officer (a/k/a title agent) for settlement. Remember to bring your two forms of ID and your certified check for your closing costs.
3) You will need to bring your homeowner’s insurance policy. You should also have a receipt showing it has been paid, or an invoice. The settlement officer (title agent) will add it to the HUD-1 settlement statement.
4) You will have to sign a Promissory Note and a Mortgage. The Note is your promise to repay the loan. The mortgage puts the property you are buying up as collateral. If you don’t make all the payments to the lender as agreed, then the lender will be forced to sell your property and apply the sale proceeds to the amount you owe. You will also be asked to sign some additional documents that your lender may require.
5) Your Settlement officer (title agent) will calculate the final HUD-1 settlement statement and explain it to you. He/she will provide you with a detailed explanation for each item. If you have questions regarding ” money, fees or costs”, now is the time to ask.
6) The seller will pass ownership to the buyer using a deed. The seller signs the deed and gives it to the settlement officer so that he/she can record it at the county courthouse. Buyers do not sign the deed. When the deed is recorded it is sent to the buyer.
7) The seller will turn over all warranty papers regarding appliances in the property. 8) If there are electronic garage door openers the seller will deliver them at closing.
9) Finally, the seller will pass the house keys to the buyer.
10) After settlement the deed and mortgage will be delivered to the recorder of deed’s office at the county courthouse.
What fees make up my closing?

The closing costs are the fees that you will be required to pay in order to close on a real estate transaction.

For a seller these costs may include: Notary fees, Transfer tax, Mortgage payoffs, credits to the buyer, and Fed Ex to send a payoff.

For a buyer these costs may include: Mortgage company fees, such as points (i.e. loan origination fees, loan discount fees), escrow reserves (i.e. taxes and insurance), private mortgage insurance (PMI), and other fees that may be required by your lender. Title Insurance fees, Attorney’s fees, Notary fees, Recording fees, Termite certifications fees, Surveying fees, Real estate agent commissions, Property taxes, the balance of your down payment.

24 hours before your closing your title insurance agent should provide an estimated HUD-1 for your review. You should review your HUD-1 to make sure that all costs, fees and calculations are correct and you should check to make sure that you have been credit for deposits and other agreed upon buyer/seller credits. Check all lender fees against the good faith estimate that was provided at the time of application.

What is a settlement?

Settlement is also known as closing. It is the event where the ownership of a property is transferred from the seller to the buyer.

Once all the title research is completed, the mortgage loan is approved, and all the paperwork is ready to be signed and recorded you will go to settlement. Closing is usually at the title agent’s office but can also be held at an attorney’s office, a real estate office, or even in the house being sold/purchased.

It involves completing of all the paperwork needed to finalize the transaction set forth by the contract (also known as the agreement of sale) that was executed by the buyer and seller. Once all of the documents have been signed, the funds disbursed and the deed and mortgage recorded, the transaction has “closed.”

What is Title Insurance?
Title insurance is protection against loss arising from problems connected to the title to your property. Before a property is purchased, it has gone through many ownership changes. We think of all past owners as links in a chain. This is called the chain of title. A weak link in the chain could cause trouble. For example, twenty years ago an owner died and left the property to his heirs. One of the heirs could not be found; but has now surfaced to claim the property. Title insurance covers the insured party for any claims and legal fees that arise out of such a problem.
What should I look for when selecting a Title Agent?
Look for someone with a sound reputation for honesty, integrity, knowledge, and experience in all phases of title insurance, as well as efficient and dependable service to their clients – someone like Clear Title and Escrow.
When does Title Insurance protection begin and end?
Title insurance protects against losses arising from events that occurred prior to the policy date. Policy coverage extends back in time for an indefinite period. Title insurance is the only type of insurance that insures past events. This is contrary to property, life or auto insurance, which protect against losses resulting from future events.
Who chooses your title insurance agent?
You should choose your title insurance agent. Many people let their real estate agent, mortgage lender or attorney pick the title insurance agent. The decision is yours to make. If you are paying the bill you should choose the agent that will best protect your interests. Would you let your real estate agent or lender choose your doctor, dentist or attorney? Of course not. You should decide which title agent will insure the largest purchase you will ever make.
Why do I need a new policy each time I refinance?
The lender is concerned that new title issues may have arisen since you purchased the property. Your lender will require that you purchase a new lender’s policy each time you refinance; even if you refinance with the same lender. A title insurance policy assures your lender that you actually own the property. It insures that no one else has a preemptive position in front of the lender, and if someone does, it pays the lender’s losses. A lender’s policy is only good for the life of a loan. It ceases to exist when you pay off the mortgage. New title searches uncover new liens. You will have to pay off these new liens as a condition of refinancing. Discounted rates are available if a new policy is taken out within short periods after the last policy. Pennsylvania now requires a disclosure be signed by all purchasers of title insurance informing them that they may be entitled to a lower rate of insurance.
Why do I need Title Insurance?

You need title insurance to protect you and your lender. Your home is often the largest single investment you will ever make. Title insurance protects you against loss from defects in the title, and/or claims made by others that a defect exists. The purpose of title insurance is to protect against loss caused by defects. Lenders require title insurance before they will loan money. Without title insurance your down payment and equity are at risk should a title defect be discovered.

Once insured, you are protected from title defects and claims against the title to your property even if they are not discovered for many years. Defects or problems could include fraud, forgery, unknown heirs, liens and encroaching neighbors. If you are uninsured and your title is challenged you will have to pay to defend yourself in court and after paying all the attorney’s fees you could still lose the property. An owner’s title insurance policy also pays for your attorney’s fees as well as paying you if you suffer a loss.