Q: What is title insurance?
A: Title insurance is protection against a claim to the title of your property.
Q: What does title insurance protect against?
A: Title insurance will protect the policyholder against the following:
- Mistakes in recording of legal documents
- Forged deeds, releases, or wills
- Undisclosed or missing heirs, including spouses
- Deeds by persons of unsound mind
- Deeds by minors
- Deeds executed under invalid or expired power of attorney
- Liens for unpaid taxes
Q: What is the difference between an enhanced and a basic owner’s policy of title insurance?
A: While homeowners insurance protects the insured against future events, such as flood Note to client: Suggest a different example given that flood damage is often a rider or separate policy? or a break-in, title insurance protects the insured against events that may have occurred in the past, prior to the purchase of the property.
Q: Must I pay a monthly premium for title insurance?
A: No. Unlike most other types of insurance, the policyholder will only pay the premium once, upon purchase of the title insurance policy.
Q: Why am I being required to purchase title insurance when I am refinancing?
A: When obtaining a refinance, even from the same source as the original loan, your lender will require title insurance to protect the lender’s investment. The lender wants assurance that the title being financed is clear of matters that could affect its lien priority.
Q: Why should I purchase title insurance if I am buying a newly built house?
A: Although you may be the original owner of the house, you certainly are not the original owner of the land on which the house was built. You want to have peace of mind, and your lender wants to know that the property has clear title and that the lender’s deed of trust has priority over other liens.
Q: What additional benefits does a title insurance policy provide me?
A: In addition to protecting your real estate investment, the owner’s title insurance policy issued to you at the conclusion of a real estate transaction provides an effective permanent record of all your due diligence, showing your ownership with reference to the official records; all recorded deeds of trust (loans) on the property; and all easements, protective covenants and the like that affect your property. The owner’s policy provides a quick and efficient reference for you, your prospective investors, lenders and purchasers, and in addition may qualify you or a proposed purchaser for a discounted title insurance rate for future sale or refinance transactions.
Q: Why should I purchase an owner’s title policy if my lender has already required a lender’s title policy?
A: The lender’s title insurance policy protects only the lender’s interest in the property and only for the life of the loan, so it is not the case that the loan policy adequately protects you! When a title underwriter provides a legal defense against a claim covered by the policy, the savings to the insured for that legal defense generally greatly exceeds the one-time premium.
Title insurance claims are not an everyday occurrence, but they do occur. A number of cases decided by the Virginia Supreme Court in recent years involve disputes regarding easements, lien priorities, or access in which title insurance claims may have been present. This does not include the many cases decided each year involving real property in the local Virginia Circuit Courts.
If you have further questions please feel free to contact us.