In every real estate transfer the matter of title examination invariably arises. The home purchaser often questions whether title insurance is really necessary when an examination of the title has been completed by an accomplished title examiner or real estate attorney, especially when the examination of available title records shows no adverse information which might lend question as to the marketability of the title. But does an examination of title records necessarily remove all doubt of title problems eventually surfacing? The answer is NO...And that is why title insurance exists and plays such a basic role in protecting the real estate interests and equity of all policy holders.
Title insurance will protect an owner's property rights including the land the house is built on. When a home is financed, bought or sold, the transaction documents are recorded in the public archives of the county where the property is located. A title company will search all recorded documents.
It is important for the buyer to know that there are two kinds of title insurance.
Lender's title insurance protects the interest of the mortgage lender. Lenders, knowing the many things that can snarl title to real property usually and rightly insist upon lender's title insurance to protect their stock holders and or investors.
Owner's title insurance protects the equity of the buyer. Both kinds of title insurance are available in most areas in a single, low cost package that protects both the lender and the buyer for as long as they or their heirs have any interest in the property. The onetime premium is small. The protection is great.
There are many title defects that can arise to cause the loss of your property or your mortgage investment. Title defects not disclosed by a most careful search of the public records, called "hidden risks", are the most dangerous. Because of them, your title may be worthless. Your attorney's examination may be the finest that skill, experience and legal knowledge can produce, but your title may be fatally defective. Here are some title defects that frequently occur. You may not discover title defects when you buy real estate, but months or years later, they can result in the loss of your property or an expensive lawsuit. Here are some title defects that frequently occur.
Forged deeds, releases, etc.
Deed from a bigamous couple
Deeds by persons of unsound mind
Deeds by minors
Ultra vires deed given under false corporate resolution
Deeds in lieu of foreclosure given under duress
Instruments under fabricated or expired power of attorney
Discovery or will of apparent intestate
Surviving children omitted from will
Birth or adoption of children after date of will
Marital rights of spouse purportedly, but not legally divorced
Mistakes in recording legal documents
False personating of the true owner of land
Deeds by persons supposedly single, but married
Deed of community property recited to be separate property
Deeds delivered after death of grantor/grantee
Deeds by aliens
Deeds to or from defunct corporations
Duress in execution of instruments
Undisclosed divorce or spouse who conveys as consort's heir
Misrepresentation of wills
Undisclosed or missing heirs
Claims of creditors against property sold by heirs or devisees
Administration of estate of persons absent but not deceased