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Frequently Asked Questions
What is a real estate settlement?
For you, the home buyer, it's the day your dream becomes a reality. However, in real estate terms, settlement is the final step in the home buying process whereby ownership of real property is transferred from seller to buyer. Purchasing a home usually represents your single largest investment. Preparations for settlement should start as soon as the contract of sale is accepted. This is the time to select your title company. The closing itself takes about one hour in which numerous documents are explained and signed, funds are received and disbursed, last minute questions on the condition of the property and operation of systems are answered and the keys are delivered. In many instances, buyers need to coordinate settlement with the arrival of their movers and cannot afford delays.
What is a title search , and why do I need one?
A title search is a detailed examination of all public records that affect a property. These records include deeds, mortgages, tax records, court records, property and name indices, and many other documents. The purpose of the search is to verify the seller's true interest in the title and right to sell the property, and to discover any claims, defects and other burdens on the property. The search protects everyone involved in the property transaction since problems with real estate are transferred with the ownership.
What kinds of problems can a title search reveal?
A title search can reveal any party that might have an interest in the property, as well as a number of title defects, liens or other restrictions. For example, things like outstanding taxes, unsatisfied mortgages, and judgments against any recent owner as well as restrictions on the use of the land may require an extensive search.
Are there any problems that a title search cannot reveal?
Yes. There are several "hidden hazards" that are impossible for a search to uncover. For instance, a previous owner may have recorded his marital status incorrectly, resulting in a possible claim by a legal spouse. Other "hidden hazards" include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise several years after the purchase of your home and can jeopardize your right to ownership.
What is title insurance?
Title insurance is a policy that protects you against loss if any of these problems results in a claim against your ownership.
What are the different types of title insurance?
There are two basic types of insurance policies - Owner's Policies and Loan Policies. The Owner's Policy protects the interests of the real estate owner; likewise the Loan Policy protects the interest of the lender or mortgagor.
Do I need both types of coverage?
Yes. Most lenders require a Loan Policy for almost all mortgages, but this policy offers no protection to the landowner. Many claims propose no threat to the lender but could cause great loss to the owner. An Owner's Policy protects the owner from the threat of loss.
How much does title insurance cost?
Probably a lot less than you think. Generally the cost of title insurance (including the search, examination and related services) is about one percent or less of the value of the property. This premium is not paid annually, but it is a one time fee usually paid at the closing.
How long does my coverage last?
The insurance coverage never needs to be renewed. It is valid for as long as you or your heirs have an interest in the property.