WHAT IS TITLE INSURANCE?
WHY SHOULD I PURCHASE TITLE INSURANCE?
Title insurance protects the policy owner against loss in the event the property's title or legal ownership ever comes into question. It helps ensure that the property owner is assuming clear title for the real estate being purchased. Title insurance is different than other types of insurance in that it offers protection against past occurrences which could result in a claim as opposed to future incidents. Coverage continues for as long as you own the property.
Title insurance is important because it protects you from liabilities that may arise from prior liens or issues with the property from previous owners, thus allowing you to use the property as you wish and sell it or secure loans with it. Without title insurance, you may be responsible for claims against your property due to errors in public records or title defects. With an owner's title insurance policy, you are covered against claims and compensated up to the amount of the policy to settle all such claims.
WHAT KINDS OF TITLE ISSUES COULD COME UP ON A TITLE SEARCH?
A title search can uncover liens such as unpaid property taxes, unsatisfied mortgages, judgments and any other restrictions limiting the use of the parcel of land.
HOW MUCH DOES TITLE
The cost of title insurance varies based on the property value. However, you only pay once for the coverage which continues as long as you own the property. If a death occurs, the coverage continues to cover the property for your heirs. Also, if you sell your property and give warranties of title to the buyer, the coverage would continue. The standard coverage addresses (but is not limited to): forgery and impersonation; lack of competency or legal authority of a party; inaccurate deeds; undisclosed (but recorded) prior liens; undisclosed (but recorded) easement or use restrictions; erroneous or inadequate legal descriptions; and deed not properly recorded.
Title insurance premium for a particular transaction is calculated as follows:
$0.00 to $100,000 = $5.75 per $1000 of Coverage
$100,001 to $1,000,000 = $5.00 per $1000 of Coverage
$1,000,001 to $5,000,000 =$ 2.50 per $1000 of Coverage
$5,000,001 to $10,000,000 = $2.25 per $1000 of Coverage
Over $10,000,000 = $2.00 per $1000 of Coverage
Example: The premium for a property being purchased and insured for $150,000 would be $825.00 calculated as follows:
$100,000 x $5.75 = $575.00
$50,000 x $5.00 = $250.00
Total Premium = $825.00**
**The example above is intended to demonstrate how the calculation is performed to determine title insurance premium. The example above does not reflect cost of endorsements, lender’s policy, settlement fees, etc.