Providing high quality real estate services in the City of Charlottesville and the surrounding counties of Albemarle, Fluvanna, Greene, Louisa, Nelson, Madison & Orange.
The title company performs an abstract, or search of the title of your property. That information will be sent to your attorney who will render an opinion and write a title report. This report acts as the support for a title committment, or title binder, to be issued and allows you to purchase the home with free and clear title.
The title insurance policy states the date of the title search, the owner's name and the property address. It further states any outstanding liens, mortgages, or easements of record against the property. As with the title opinion drawn up by the attorney who examined the abstract, the title insurance policy states any possible obstacles to clear title.
These obstacles may include
* unpaid taxes or assessments not of public record
* unrecordded liens and mortgages
* repair work completed but not paid for
* questions on exact locations of boundary lines (proclaiming that a survey should be obtained if there are any such questions)
* any interest or claims not of public record that the purchaser could determine by inspecting the property and inquiring of the person in possession
* any zoning restrictions that should be checked
* claim by a missing heir or a previous owner
* a deed conveyed by a married person purporting to be single
* forged deeds
The title company inspects the title and validates it to the title holder. The title policy is a contract of indemnity against loss or damage arising out of matters that have occurred in the past. There are many possible causes of title defects that are not disclosed by examination. If the claim, lien, or defect has never been recorded, it will not appear on record. Title insurance protects against such undisclosed and hidden risks, which includes forged deeds, illegal acts of trustees, guardians, or attorneys, or false claims of ownership. Human errors in copying and recording or the loss or destruction of records also occur. When claims are made, the title insurance company is responsible for satisfying legitimate insured claims or for defending the interests of the policy holder in court.
Mortgage Company's Title Policy
The mortgage company's title policy protects their investment for the loan amount only and for the term of the mortgage. Lender's title insurance is usually written in the amount of the home loan and protects the lending institution from losses resulting from defective titles. Lending institutions often will refuse to make a loan unless a lender's policy is purchased. Because lender's insurance expires when the mortgage loan is repaid, it does not protect the home buyer from title defects.
Owner's Title Policy
The settlement agent will ask if you'd like to have a separate "owner's title policy" to ensure good title. The owner's title policy will guarantee against any title loss or damages suffered as a result of liens or defects in the title that were not revealed when the examination of the title was made. Owner’s title insurance is purchased for a one-time fee at closing and lasts as long as you or your heirs have an interest in the property. This may even be after the insured has sold the property. Only Owner’s title insurance fully protects the buyer should a problem arise with the title that was not uncovered during the title search. Owner’s title insurance also pays for any legal fees involved in defending a claim to your title.
Owner's title policies are not transferable!
How Am I Protected?
In order to issue title insurance, the title company must search public land records for matters affecting that title. Many search the “chain” of title back 60 years. One in four title searches find a title problem that is fixed before the insurance is issued. Some examples of items that can cause a problem are: deeds, wills and trusts that contain improper information; outstanding judgments or tax liens against the property; and easements. Title companies fix the problems then issue the title insurance.
Occasionally, in spite of an exhaustive title search, hidden hazards can emerge after closing. Things such as mistakes in public record, previously undisclosed heirs claiming to own the property; or forged deeds could cloud the title. Owner’s title insurance offers financial protection against these by negotiating with third-parties, and paying claims and the legal fees involved in defending the title.
I’m buying a newly built home; do I need title insurance?
Construction of a new home raises special title problems for the lender and owner. You may think you are the first owner when constructing a new home on a purchased lot. However, there were most likely many prior owners to the unimproved land. A title search will uncover any existing liens and a survey will determine the boundaries of the property being purchased. In addition, builders routinely fail to pay subcontractors and suppliers. This could result in the subcontractor or supplier placing a lien on your property. Again, lenders want to be sure the property has clear title, and they are insuring the correct property. Purchasing owner’s title insurance will protect you against these potential problems and pay for any legal fees involved in defending a claim.
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