for More Information

A title is the evidence that verifies one has right to possession of land. Title insurance plays a major role in making certain that your home ownership is free and clear of any rights or claims of prior owners. Title insurance protects the homeowner and the mortgage lender from potential risks associated with defects in title.

There are two kinds of title insurance: Owner's or Lender's. Owner's Coverage is issued at the time the buyer purchases the property. Coverage is paid based upon the purchase price or the loan amount, whichever is greater. Coverage will last as long as the buyer or the buyer's heirs have an interest in the property. However, an owner's policy is not issued when you refinance.

Lender's or Mortgagee's Coverage protects the lender's investment in the property. However, this policy insures the lender against title defects that may affect the security of the mortgage loan - not the buyer's investment. The lender's title insurance policy is based on the amount of the mortgage and it decreases as the mortgage is paid off. Even if the lender has a title policy, the buyer still needs an owner's title policy to protect his/her interest.

Title insurance is necessary to protect against those risks which are present in all real estate transactions. Hidden hazards, which cannot be detected in the examination of title, can be forgery, incompetence of grantor or mortgagor, fraud, unknown heirs, impersonation, prior taxes or liens. And these are just to name a few.

Title insurance is directly related to the value of the property. The higher its value, the more coverage is needed. The premium is small compared to the total purchase price. The premium is paid only once and remains in force for as long as the property is owned by the insured.