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A title is the foundation of property
ownership. It is the owner's right to possess and use the
property.
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Title insurance is your policy of
protection against "hidden hazards" - resulting in a claim
against your ownership.
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A title search is a detailed
examination of the historical records concerning a property.
These records include deeds, court records, property and
name indexes, and many other documents. The purpose of the
search is to verify the seller's right to transfer
ownership, and to discover any claims, defects and other
rights or burdens on the property.
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Because land is permanent and can have
many owners over the years. Various rights in land (such as
mineral, air or utility rights) may have been acquired by
others by the time you come into possession of it, even if
the land has never before been built upon. So in order to
transfer a clear title to a piece of land, it is first
necessary to determine whether any rights are outstanding.
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A title search can show a number of
title defects and liens, as well as other encumbrances and
restrictions. Among these are unpaid taxes, unsatisfied
mortgages, judgments against the seller and restrictions
limiting the use of the land.
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Yes. There are some "hidden hazards"
that even the most diligent title search may never reveal.
For instance, the previous owner could have incorrectly
stated his or her marital status, 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 after you've
purchased your home and can jeopardize your right to
ownership.
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That depends on the claim. In an
extreme case, you could lose your entire home and property,
and still be liable to pay off the balance of your mortgage.
Most claims aren't that dramatic, but even the smallest
claim can cost you time, money and aggravation, and you may
have to pay costs for a legal defense.
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If a claim is made against your
property, title insurance will, in accordance with the terms
of your policy, assure you of a legal defense, and pay all
court costs and related fees. Also, if the claim proves
valid, you will be reimbursed for your actual loss up to the
face amount of the policy.
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Not necessarily. A deed is just a
document by which the right of ownership in land is
transferred, whatever that right may be. It's not proof of
ownership, and it doesn't do away with rights others may
have in the property. In addition, a deed won't show you
liens or claims that may be outstanding against the title.
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Because the owner could, in a very
short time, do many things to encumber the title. For
example, he could grant easements or construct improvements
that encroach on adjacent property. It is necessary to
conduct an up-to-date title search to uncover any such
problems.
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A title policy insuring the builder
does not protect you. Also, a great many things could have
happened to the land since the builder's policy was issued.
Liens, judgments and unpaid taxes for which prior owners
were responsible may be disclosed after you purchase the
property, causing you aggravation and costing you money.
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The seller provides an owner's title
insurance policy, which is evidence to the buyer that there
is a marketable title to the subject property. If there are
problems with the title, a title search reveals them and
permits resolution of the problem prior to closing. The
buyer provides the title insurance loan policy, which
protects the lender's security interest in the property and
assures the lender of first lien position.
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For as long as you or your heirs retain
an interest in the property and, in some cases, even beyond.
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