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Title Insurance Answers

What is title insurance?

When you buy a property, you want to be sure the seller has the right to sell it and that when the transaction closes, you actually own it.

A title insurance policy protects property owners and lenders from losses that could result from disputes over ownership of a property's title. This could include fraud, liens against the property, or errors missed during a title search.

Title insurance is important because it protects you from title hazards that could threaten the financial investment you have made in your home or other property. It also protects the lender's investment.

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What is an owner's policy?

An owner's title insurance policy guarantees that the buyer has the right to the property. It usually covers the cost of any legal fees that arise if you have to defend your claim. The cost is based on the price of the property.

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What is an lender's policy?

A lender's title insurance policy protects the bank or other lending institution that issues your mortgage from any losses resulting from disputes over who owns the property.

A policy covers the amount of the loan and the cost is based on the amount of that loan. Most lenders require this coverage, which ends when the mortgage is paid.

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Do I have to pay a monthly premium for title insurance?

Title insurance is issued for a one-time fee usually due when you are closing or settling the real estate transaction. Insurance benefits are paid only to the name that is on the policy. Coverage lasts as long as you hold title to the property.

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What's covered by title insurance?

Owner's title insurance protects you from:

  • Fraud associated with the title ownership
  • Liens existing against the property at the time the policy was issued
  • Mistakes in the public record that are not caught before the sale
  • Inaccurate or conflicting wills and trusts related to the title
  • Missing heirs who suddenly appear and claim to own the property
  • Forged or misfiled deeds and other documents
  • Errors or flaws in the title that are not discovered during the initial title examination

Lender's title insurance covers the amount of the mortgage loan and protects the lender's interest in the property if any of the above risks occur.

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Who pays for title insurance?

Who pays for the owner's policy depends on the state, and sometimes the county, where the transaction is taking place. For example, in Los Angeles County, the seller usually pays for the policy to ensure that the buyer has legal title to the property. In Marin County, north of San Francisco, the buyer usually pays this expense.

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What is a title search?

Very simply, it's the process of examining available records related to the property to make sure that the seller is the legal owner and that there are no outstanding claims against the property.

See how rates are determined in your state

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How are rates for title insurance determined?

Each state has its own rules for rates for title insurance.

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How much does title insurance cost?

While some states, such as Texas, Florida and New Mexico, regulate title insurance rates, the cost of title insurance in many states varies enough to make it worthwhile to shop and compare policies and prices. You have the right to choose your title insurance provider. Find the best rates near you

Ask your title agent about closing package deals. Some title companies offer special rates that may include escrow or settlement services, notary and home warranty coverage with a title policy at a "bundled" rate.

Many title companies offer a short-term rate for property that has been resold within the past five years. If you think you may qualify for special rates, be sure to ask various insurers, as you shop and compare.

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Are prices for title insurance that different?

It depends on the state where the transaction takes place. In California, prices vary among title companies within a given ZIP code. In Texas, Florida and New Mexico, the prices are regulated, so you won’t be comparing rates, but you can and should compare the services provided by title companies. Ask about additional fees before you decide.

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