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Why Do You Need a Title Insurance Policy?
If title insurance companies work to eliminate risks and prevent
losses caused by defects in the title before the closing, why
do you need a title insurance policy? The title to the property
could be seriously threatened or lost completely by hazards
which are considered hidden risks—“those matters, rights or
claims that are not shown by the public records and, therefore,
are not discoverable by a search and examination of the
those public records.” Matters such as forgery, incompetency
or incapacity of the parties, fraudulent impersonation, and
unknown errors in the records are examples of “hidden risks”
which could provide a basis for a claim after the property has
been purchased.
Title insurance isn’t just for a homeowner. Subdividers need
it when planning a new tract of homes or a commercial
strip center. Attorneys use it for clients who are investing in
shopping centers, hotels, office buildings and countless other
projects. Builders need it in order to obtain construction loans
from their lender. Everyone wants to have peace of mind when
investing their hard-earned money. The title insurance company
will help protect these important investments, no matter how
large or small, with its own reputation and financial strength.
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Why Does the Lender Need a Policy on My Property?
For the lender, a title policy is a guarantee that it has a valid
and enforceable lien (loan or deed of trust) secured by the
property, that no one else other than those listed on the
policy has a prior claim (or loan, etc.) and that the party
to whom they are making the loan does own the property
being used as security for the loan. This protection remains
in effect as long as the loan remains unpaid.
The existence of a lender’s title policy encourages lenders
such as banks, savings and loan associations, commercial
banks, life insurance companies, etc., to loan money.
Because they are lending other people’s money (savings or
policy holder’s funds), they must be concerned with safety
should the borrower not make their payments. The title
company insures that the title to the property is marketable
in the event of foreclosure and the guarantee is backed by
the integrity and solvency of the title company. Of course,
this benefits everyone—from the single-family homeowner
to the owner of a high-rise building.
What is Title Insurance?
The purchase of a home is often the single largest investment
people will make in a lifetime; therefore, the importance of fully
protecting such an investment cannot be over stressed. Title
insurance is protection which assures that the rights and interests
to the property are as expected, that the transfer of ownership
is smoothly completed and that the new owner receives
protection from future claims against the property. It is the most
effective, most accepted and least expensive way to protect
property ownership rights.
Because land endures over generations, many people may develop rights and claims
to a particular property. The current owner’s rights—which often involve family
and heirs—may be obscure. There may be other parties (such as government
agencies, public utilities, lenders or private contractors) who also have “rights” to the
property. These interests limit the “title” of any buyer.
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© Ticor Title Company
WHAT IS TITLE? - FAQ




