Title insurance plays an important role when purchasing a home, here are the things you need to know:
Conducting Title Searches of Underlying Documents
The chosen title company will search the title records of a property when a Preliminary Report is requested. Within the Preliminary Report it will show the legal description of the property, the current owner's name, all underlying encumbrances, liens, judgments, deeds and any other underlying matters such as easements, covenants, conditions, and restrictions (CC&R's) and AGREEMENTS which affect and run with the land.
|View easements or covenants||Parking|
|Height restrictions||Road maintenance|
|Building limitations||Shared driveway|
|Encroachment issues: fences, gardens, swimming pools and sheds||Solar panels|
|Water well sharing||Noise|
|Covenants, Conditions and Restrictions||CC&R's|
There are Several Types of Title Policies:
- Standard Coverage Owner's Title Policy (CLTA Standard) Covers clear title, incorrect signatures, fraud, forgery, defects in recordation, restrictive covenants, encumbrances and judgments.
- Home Owners Extended Coverage Residential Owner's Title Policy (ALTA/CLTA) Covers building permit violations, from previous owners, covenant violations from previous owners, subdivision maps, living trusts, structure damages from mineral extractions, encroachments and forgeries after title is issued.
- Lender's Title Policy (ALTA Concurrent) Covers mechanic's liens and unrecorded liens, unrecorded easements, access rights, defects and other unrecorded documents.
The owner's policy of title insurance can be issued with Owner's Extended Coverage (OEC) which provides additional protections for the insured. This ties into the similar sections of the Real Estate Commission approved contract forms which deal with the type of policy requested by the Buyer.
8.1.3 of the contract form explains the OEC coverage which allows the parties to choose whether it will be required and sets forth the party responsible for payment of the additional premium. The cost of the OEC can be paid by either the Buyer, Seller or split between them.
Benefits of Title Insurance
An ALTA/CLTA policy affords the Buyer and his or her heirs protection against any serious financial loss due to a defect in the title of the property and protects the Seller from breach of warranties. Title insurance covers claims arising out of problems that could have been discovered in a public record search. In addition, those that are considered non-recorded defects that could not have been discovered in a public records search.
Title insurance is required by all lenders. A lender title insurance policy (ALTA Concurrent) provides coverage for the lender against the loss of security as a result of a title problem. The lender's protection remains in effect until the mortgage is paid and satisfied.
Typically owners title insurance is a single one-time premium. Usually, in Mesa County the seller pays for the owners policy unless the Buyer chooses the title company to issue the policies then he would pay.
If you are thinking of buying or selling a home and have questions, contact Sandra through the form at the right.