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What is
Title Insurance?
Title insurance
is a contract to protect an owner against losses arising through
defects in the title to the real estate owned. If the title is
insurable, the company guarantees the owner against any loss due
to defects in title or expense in legal defense of the title up
to the amount or liability of the actual insurance policy.
Usually the amount of that policy is the purchase price.
Why Buy
Title Insurance?
When a person buys a car or consumer goods, they seldom need to
know whether the former owner is married, single or divorced;
whether they have paid their taxes or are involved in a lawsuit.
But when a person buys a home, it is necessary to have all that
information and much more. While he may own the property, others
may also have rights in that same real estate.
A competent investigation can uncover such items as unpaid
taxes, easements, restrictions and more. However, all items
affecting the title are not contained in a single book, in a
single office or even in the same city. Then, add to this the
possibility of human error at a multiplicity of points. Yet,
what is not in the public records often causes title problems.
For all these reasons and many more, a property owner needs the
protection afforded by title insurance.
What Can
Make Title Defective?
There are many possible causes of title defects that no
examination can disclose. That is because they have never been
recorded and thus do not appear in the records. A title
insurance policy protects the owner against all these hidden
risks; those listed below and many more:
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FRAUD
False claims of ownership, forged deeds, wills, signatures,
conveyances, instruments, false representations, false
records of all sorts, illegal acts of the trustees,
guardians, conservators and attorneys.
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IMPROPER
DEEDS AND WILLS
Deeds by persons of unsound mind, minors; deeds delivered
after death or without the grantor's consent; invalid,
suppressed erroneous wills, missing heirs, unsettled
estates.
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HUMAN ERROR
Errors in copying, indexing, recording; errors by
administrators, executors, trustees, guardians and
attorneys; destruction of records.
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LIENS AND
OTHER RIGHTS
Liens for unpaid state, inheritance, income, property and
gift taxes; homestead rights, community property rights;
irregular court proceedings, court opinion reversals, lack
of court jurisdiction. defective foreclosures.
The time to
purchase a title policy is when the earnest money contract is
signed. That way an owner is protected from the very beginning.
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