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1. What is
a title?
2. Why is transferring the
title to real estate different from
transferring the title to other items,
such as a car?
3. What is a title
search?
4. What kinds of problems can
a title search reveal?
5. Are there any problems that
a title search cannot reveal?
6. What is title insurance?
7. How much could I lose if a
claim is filed against my property?
8. How does title insurance
protect my investment if a claim should
arise?
9. The owner of the property
has a deed. Isn't that proof of
ownership?
10. Wouldn't an abstract show
property limitations and restrictions ?
11. The owner of the property
I want to purchase has lived in the home
for only six months. He had a title
search done six months ago. Why do I
need another one?
12. If the builder of my home
already has title insurance on the
property, why do I need it again when I
purchase the land from him?
13. Are there different types
of title insurance policies?
14. How much does title
insurance cost?
15. How long does my coverage
last?
1.
Question: What is a title?
Answer:
A title is the foundation of property
ownership. It is the owners right to
possess and use the property.
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2. Question:
Why is transferring the title to real
estate different from transferring the
title to other items, such as a car?
Answer:
Because land is permanent and can have
many owners over the years, various
rights in land may have been acquired by
others (such as mineral, air or utility
rights) 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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3. Question: What is a title search?
Answer:
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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4. Question: What kinds of problems can
a title search reveal?
Answer:
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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5. Question: Are there any problems that
a title search cannot reveal?
Answer:
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 marital status, resulting in
a possible claim by his 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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6. Question: What is title insurance?
Answer:
Title insurance is your policy of
protection against loss if any of these
problems - even a "hidden hazard" -
results in a claim against your
ownership.
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7. Question: How much could I lose if a
claim is filed against my property?
Answer:
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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8. Question: How does title insurance
protect my investment if a claim should
arise?
Answer:
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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9. Question: The owner of the property
has a deed. Isn't that proof of
ownership?
Answer:
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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10. Question: Wouldn't an abstract show
property limitations and restrictions ?
Answer:
Maybe - and maybe not. An abstract is a
history of the property title as
revealed by the public records.
Abstracts may contain errors and do not
disclose "hidden hazards" that can
threaten your property title if you do
not have a title insurance policy.
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11. Question: The owner of the property
I want to purchase has lived in the home
for only six months. He had a title
search done six months ago. Why do I
need another one?
Answer:
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. He could
get married or divorced, or have a lien
filed against the property. It is
necessary to conduct an up-to-date title
search to uncover any such problems.
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12. Question: If the builder of my home
already has title insurance on the
property, why do I need it again when I
purchase the land from him?
Answer:
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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13. Question: Are there different types
of title insurance policies?
Answer:
Yes. Basically there are two different
types of policies - a loan policy and an
owner's policy. The loan policy protects
the lender's interest in the property as
security for the outstanding balance
under the buyer's mortgage. The owner's
policy safeguards the buyer's investment
or equity in the property up to the face
amount of the policy. (Title insurers in
many states offer increased policy
coverage through inflation endorsements
to cover increases in value due to
inflation.)
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14. Question: How much does title
insurance cost?
Answer:
Probably a lot less than you think.
Charges vary in different sections of
the country, but generally the cost of
title insurance (including search,
examination and related services)
amounts to about one percent, or less,
of the cost of the property. And unlike
other insurance premiums, which must be
paid annually, a title insurance premium
is paid one time only, usually at
settlement.
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15. Question: How long does my coverage
last?
Answer:
For as long as you or your heirs retain
an interest in the property and, in some
cases, even beyond.
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