Title Insurance FAQs
Protecting Your Ownership Rights
Not sure what title insurance is, or how it protects your ownership rights? From the basics of title insurance and types of policies available, to the most common title issues and difference between a title policy and title commitment, we've compiled a comprehensive guide to address some of your most frequently asked questions.
Let NFAAT be your trusted resource as you navigate the complexities of title insurance.
Title Insurance FAQs
Title insurance policies protect against financial losses related to undiscovered defects in a property’s title and defend your ownership rights. Unlike most types of insurance, such as homeowners or automobile insurance, which protect against future events, title insurance protects against loss due to events that occurred before you purchased the home.
There may be two types of title insurance policies, but only one protects you and your ownership rights.
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Owner’s Policy: This policy protects your ownership rights for as long as you or your heirs have an interest in the property. With an Owner’s Policy, if a claim were to be made against your property after you’ve purchased it, your title insurance would cover costs associated with defending your ownership rights.
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Loan Policy: Typically required by your lender, this policy is similar to the Owner’s policy, but it protects the lender’s financial interest, not the homeowner’s.
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The lender title insurance policy only protects the lender, covers the loan amount, and provides no coverage for the homebuyer. Without the protection of an Owner’s Policy, your right to ownership may be subject to legal claims against you and the property.
Even after the most meticulous search of public records and a thorough review of the property's history, defects or issues in the chain of title (ownership history) can remain undiscovered for months or even years after you purchase a home.
Some of the most common title issues include:-
Forged documents
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Undisclosed/missing heirs
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Mental incompetence of seller
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Illegal Deeds
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Errors in Public Records
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Undisclosed Mortgages/Liens
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Tax Liens
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Survey or boundary disputes
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Adverse Possession Claims
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Conflicting Wills
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Incorrect legal description
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Claims from ex-spouses
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Title insurance costs are determined by a one-time premium based on the purchase price of the property and the amount of the loan. It provides protection for your property rights for as long as you or your heirs have an ownership interest in the property. Your home may be the single largest investment you will make in your life. You insure everything else that’s valuable to you—your life, car, health, pets, etc., so why not your largest investment? - Calculate Title Quote.
The policy cannot be issued until after your deed and mortgage are recorded with the county, so you’ll typically receive the policy by mail 30 days after closing.
Contact our office for a copy of your policy/policies.
The buyer typically pays for the Loan Policy, and who pays for the Owner’s Policy is negotiable and should be discussed while negotiating your contract. Discuss this with your real estate agent or contact our office for more information.
Yes, if you are paying for the title insurance, you have the right to choose the title insurance company that facilitates your closing and issues the title insurance policies.
The title search and exam process include a thorough review of public records to verify the property's legal ownership and to identify any claims, liens, or encumbrances that could affect the transfer of title.
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The title search involves collecting documents from various sources to establish a "chain of title." Sources may include county, city, state, and federal records to find deeds, wills, trusts, divorce decrees, court judgments, and liens. The search process is also used to ensure all property taxes are up to date.
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The title exam refers to the analysis of the documents gathered during the title search.
The search and exam results are compiled to generate a Title Commitment, outlining issues to be addressed before the property can be transferred and the conditions under which the title policy can be issued.
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A title commitment is not the same as a title policy. While the commitment indicates the intent to issue insurance and sets the conditions for a policy to be issued, the title policy is the actual insurance contract that protects against specific claims against the property’s title. The title policy is issued after closing, once all conditions in the commitment have been met and the transfer of ownership is completed.
Contact NFAAT if you have any additional questions about title insurance, the closing process, or protecting your ownership rights.
