What is title insurance, and why do I need it?

WHO CHOOSES THE TITLE INSURANCE COMPANY?

Consumers–KNOW YOUR RIGHTS!  Eastland Title Company is committed to providing you the best possible customer care and product in closing services and title insurance policies.

A federal law called the Real Estate Settlement Procedures Act (RESPA), now governed by the Consumer Financial Protection Bureau (CFPB) entitles an individual homeowner to choose a title insurance company when purchasing or refinancing residential property.  Consumers also have the right to choose other service providers when contemplating a purchase, i.e. surveyors, inspectors.

Generally, homeowners do not make this decision for themselves and instead rely on their real estate professional’s or bank’s choice;  however, the homeowner retains the right to choose a different insurer.  RESPA makes it unlawful for any bank, broker or attorney to mandate that a particular title insurance Company be used.  Doing so is a violation of federal law and any person or business doing so can be fined or lose its license.

WHAT IS TITLE INSURANCE?

 It is a form of indemnity insurance policy which insures the owner and lender against financial loss should the condition of title to the land have defects in title and from the invalidity or unenforceability of mortgage loans when the policy was purchased.

WHY DO I NEED TITLE INSURANCE?

The Eastland Title team care about our clients!   Real property record keeping and title insurance is our business.  It is a business and type of insurance we greatly value!  We believe the premium fee for the policy will be the most important money you will spend in relation to the purchase of real estate.  One of the largest investments  of your life should be protected by obtaining a title insurance policy.  One never knows what the future holds!

Title insurance is meant to protect an owner’s or lender’s financial interest in real property against loss due to title defects, liens, or other matters.  The insurance will defend against law suits attacking the title, or reimburse the insured for the actual monetary loss incurred up to the dollar amount of insurance provided by the policy.

TYPES OF POLICIES

Owner Policy:  The Owner Title Policy (OTP) assures a purchaser the title to the property is vested in that purchaser and the land is free from all defects, liens, and encumbrances except those listed as exceptions in the policy or are excluded from the scope of the policy’s coverage.  It also covers losses and damages suffered if the title is unmarketable, lack of right of access to the land, outstanding taxes which were overlooked and not collected at purchase. 

Standard coverage handles such risks as:  1) forgery and impersonation,  2)  lack of competency,  3)  capacity or legal authority of a party,  4) deed not joined in by a necessary party (co-owner, heir, spouse, corporate officer or business partner),  5)   undisclosed (but recorded) prior mortgage or lien,  6)  undisclosed (but recorded) easement or use restriction,  7)  erroneous or inadequate legal descriptions,  8)  lack of right of access,  9)  and deed not properly recorded.

Loan Policy:  The Loan Title Policy (LTP) coverage is only for a mortgage lender.  Most lenders require a title policy purchased by their Borrower.    This policy also covers the cost of defending insured matters against attack.

COMPARISON WITH OTHER TYPES OF INSURANCE

The important thing to remember in obtaining a title insurance policy is you only pay the premium one time and the coverage continues in effect for as long as you have an interest in the covered property. 

Most insurance, i.e. homeowners, life, automobile, is a monthly premium cost.   Those are policies where the insurer indemnifies or guarantees another party against a possible specific type of loss (accident or death) at a future date.  Title insurance, however, insures against losses caused by title problems that have their source in past events.

Eastland Title Company has a combined 50 years experience in customer service, abstracting, examining title from recorded public records, and curing or eliminating title defects which adversely affect real property transactions before a purchase transaction is closed.  This is achieved through Eastland Title’s qualified abstract team perpetually upgrading and maintaining our sovereign title plant in order to search names and legal descriptions, as well searching names in various  other public record sources.

Call Eastland Title Company to answer any questions you might have or obtain further information regarding title insurance and the one time premium fee.  We welcome a visit or phone call from you!

Serving Hill County for over 100 Years in providing real property abstracting and title insurance services.