What is a title?
A title is the evidence, or right, that a person has to the ownership and possession of land. It is possible that someone other than the owner has a legal right to the property. If that right can be established, this person can claim the property outright or make demands on the owner as to its use.
What is title insurance?
A policy, usually issued by a title insurance company, which guarantees that an owner has a title to a property and insures against errors in the title search. The cost of the land title policy is usually a function of the value of the property, and is often borne by the purchase and/or seller. A title insurance policy is protection for the lender as well as the home buyer against any disputes with the title for the property.
Do I have to use the title insurance company recommended by my attorney, lender or realtor?
No! You have the right to choose your own title insurance underwriter. You should make your preferences known early in the escrow/closing process to avoid confusion. If anyone insists you use particular title insurance companies, it’s in your best interest to ask them if they are affiliated with the company they are recommending.
What is a title examination or title search?
It’s a close examination of all public records that involve a property title (house deed) to a piece of real estate. The person conducting the search looks at past property deeds, wills and trusts to make sure the title passed correctly to each new owner. The examiner tries to verify all prior mortgages, judgements and other liens have been paid in full. A title search should uncover potential problems, such as rights others may hold (rights of ways, view easements, power line easements, mineral rights), claims by prior undisclosed heirs and pending legal actions.
What will title insurance protect me from?
Some common examples of problems covered by title insurance include:
A. Improper execution of documents.
B. Mistakes in the recording of legal documents.
C. Mistakes in the indexing of legal documents.
D. Mistakes in legal descriptions of property.
E. Forgeries and fraud.
F. Undisclosed or missing heirs.
G. Unpaid taxes and assessments.
H. Unpaid judgements and liens.
I. Unreleased mortgages.
J. Incorrect interpretation of wills.
K. Mental incompetence of grantors of property.
L. Impersonation of the true owner of the land by fraudulent persons.
M. Fraud in securing essential signatures.
N. Refusal of lender to provide financing based upon conditions of title.
O. Refusal of potential purchase to accept title based upon conditions of title.
What types of title problems are not covered?
A. A title insurance policy does not cover defects that occur after you purchase the property.
B. Policies often exclude problems with easements, mineral and air rights, and liens.
To whom is the title insurance policy issued? Who is paid if there is a problem?
A. A lender’s policy is usually issued for the amount of the mortgage. It pays the lender if there is a problem
B. An homeowner’s policy covers the property’s full sales price and insures the owner against loss
Who pays for the title insurance?
The cost can be negotiated between the buyer and seller
How much does title insurance cost?
The one time premium is directly related to the value of your home. In Missouri the rates are set by the Missouri Department of Insurance. Typically, it is less expensive than your annual auto insurance. It is a one-time only expense, paid when you purchase your home, yet it continues to provide complete coverage for as long as you or your heirs own the property.
What if title problems are found after closing?
A. The title insurance policy will pay your legal fees if you must go to court to defend your property deed.
B. If you lose the property the title insurance company should pay you for the loss up to the amount of the title insurance policy.