The Basics of Title Insurance

1. THE BASICS OF TITLE INSURANCE

2. Title insurance is an indemnity policy that protects you or your mortgage lender against problems relating to the property's title prior to the date of the policy. Unlike home insurance and car insurance, which focus on possible future hazards and charge an annual premium, title insurance is a safeguard against loss from hazards and defects already existing in the past. Title insurance also protects you (or your lender) if a lawsuit is filed against the title. Here are a few circumstances where indemnity insurance might come into play: If someone forged a signature in a past transfer of the title from one owner to another. Unpaid real estate taxes on the property. Liens against the property, including foreclosure, that are unresolved.

3. THREE TYPES OF TITLE INSURANCE There are three types of title insurance, with each type covering different perils. According to the Washington State Department of Financial Institutions, here is a breakdown of each kind:

4. 1.BASIC LENDER'S POLICY (PURCHASED BY BANKS AND OTHER LENDERS) 2. BASIC OWNER'S POLICY Owner's title insurance fully protects you if a problem surface with the title that was not uncovered during a title search, and it pays for any legal fees involved in defending a claim against your title to the property. Lender's title insurance is a requirement in most states to close on a mortgage. But the lender's version only protects the lender up to the amount of the mortgage, and it doesn't protect your equity in the property. It will cover the following: Owner's title insurance, issued in the amount of the real estate purchase, can be bought for a one-time fee and lasts as long as you or your heirs have an interest in the property. The premium charged varies from state to state, but it is usually 1 percent the purchase price of the property, according to the American Land Title Association (ALTA). In California, for example, owner's title insurance ranges from $1,200 to $2,000 for a $500,000 home, says the California Land Title Association. The parameters of an owner's policy vary by state. An owner's title insurance policy may protect the full value of your home, including your equity, for only a couple hundred dollars. In some states, home sellers will pay for owner policies to make good on the title to the buyer. And sometimes borrowers must buy it as an add-on to the lender's policy.     Mechanic's liens and unrecorded liens    Unrecorded easements and access rights    Defects and other unrecorded documents

5. The most basic extended coverage policy occurs when the standard exceptions have been removed. To get the standard exceptions removed or modified, the purchaser of title insurance must meet criteria that the insurer sets for each standard exception. 3. EXTENDED OWNER'S POLICY In addition to the basic extended coverage, endorsements to the title policy can be added to the coverage to protect against additional risks. Some of these additional risks could include the following:    Building-permit violations    Subdivision maps    Covenant violations    Living trusts    Structure damage from mineral extractions    Encroachments and forgeries after title insurance is issued

6. Sources: https://artesiantitle.com/ https://www.insure.com/home-insurance/title.html