Staunton, VA: FAQ's About Title Insurance and Real Estate Settlement
Why do I need title insurance?
Title insurance protects you from past events, which may or may not be part of the public record. However, those events can adversely affect an owner's interest in their property. For example, fraud, forgeries, clerical errors.
How much does title insurance cost?
Title insurance is a one-time only investment, unlike most insurance policies. For about the price of one annual car insurance premium, your owner's title insurance protects you for as long as you and your heirs own the property, or have an interest in the property.
How does title insurance work?
If the title on your property were to ever be challenge, the title insurer assumes accountability for legal expenses to defend it. Additionally, the title insurer takes on the legal expenses to defend your property for as long as you own it.
What if my defense is not successful?
If the defense of your property title is not successful, you will be reimbursed for any lost value on your property.
Why can't I just get the lender's title insurance policy?
The lender's title policy, which is paid for by the buyer, protects the lender's investment. Most lenders require it in order to secure a loan. Because the lender is only interested in protecting its security, the property, lender's title insurance only covers the amount of the loan. As you pay down your mortgage, the value of the lender's policy decreases.
The equity you build in your home is not covered. With an owner's title policy, covers the total amount of the value of the property at the time of purchase. You may want to consider purchasing an inflation rider that will adjust the amount of coverage to reflect the increase in value of your property over time.
Owner's title policy also protects you from financial loss in case problems develop later regarding rights to ownership of your property.
How does an owner's policy protect me? Can you give me some examples?
Of course! Your owner's policy protects you from problems such as: Forgeries, fraud, undisclosed or missing heir, mistakes in the recording or indexing of legal documents, improper execution of documents, unpaid taxes, assessments, judgements and liens.
It also protects you from unreleased mortgages, mental incompetence of grantors on the deed, impersonation of the true owners by fraudulent people, and the refusal of potential purchaser to accept title based upon the condition of the title.
What can make the title to my home defective?
When you purchase a home, you take "title" to it. Even though the title is searched meticulously, any number of problems that are publicly undisclosed can make a title defective. These are called hidden "defects" and are dangerous because you may not learn of them for months, even years! Once identified, you could spend a substantial sum of money for a legal defense and still lose your home.
Won't the lender's title insurance protect me?
No. Lender's title insurance that the lender has a valid, enforceable lien on the property. Most lenders require this insurance and the borrower must pay for it.
What kind of title problems can arise?
Fraudulent acts by the previous owners such as forged documents that transfer no title to the real estate, forged mortgages, forged satisfactions or releases of mortgages, impersonating the true owners, instruments executed under expired or fabricated power of attorney. Additionally, the deed could have been executed by someone who neglected to get divorced before he remarried.
Or, who did not get divorced and inherited the property as as the surviving spouse. Or, someone who forgot that he previously sold the property to someone else and that person is now in possession of the property. Or, you may have acquired a perfectly good title to a property that has no legal access. These are all common title problems.
What is a "cloud" on the title?
This is an actual or apparent outstanding claim on the title. Examples of clouds are and old mortgage or deed of trust with no recording showing that the secured debt was paid off.
A failure to properly transmit all interests in the property to the previous owner is also a cloud on the title. For example, mineral rights. If a deed was improperly written or signed, or there was an unresolved legal debt or a levy by a creditor or taxing authority "clouds" the title.
The cloud can be quietly removed by finding a person to create or execute a document proving that the debt has been paid or corrected.
Title insurance protects you from past events, which may or may not be part of the public record. However, those events can adversely affect an owner's interest in their property. For example, fraud, forgeries, clerical errors.
How much does title insurance cost?
Title insurance is a one-time only investment, unlike most insurance policies. For about the price of one annual car insurance premium, your owner's title insurance protects you for as long as you and your heirs own the property, or have an interest in the property.
How does title insurance work?
If the title on your property were to ever be challenge, the title insurer assumes accountability for legal expenses to defend it. Additionally, the title insurer takes on the legal expenses to defend your property for as long as you own it.
What if my defense is not successful?
If the defense of your property title is not successful, you will be reimbursed for any lost value on your property.
Why can't I just get the lender's title insurance policy?
The lender's title policy, which is paid for by the buyer, protects the lender's investment. Most lenders require it in order to secure a loan. Because the lender is only interested in protecting its security, the property, lender's title insurance only covers the amount of the loan. As you pay down your mortgage, the value of the lender's policy decreases.
The equity you build in your home is not covered. With an owner's title policy, covers the total amount of the value of the property at the time of purchase. You may want to consider purchasing an inflation rider that will adjust the amount of coverage to reflect the increase in value of your property over time.
Owner's title policy also protects you from financial loss in case problems develop later regarding rights to ownership of your property.
How does an owner's policy protect me? Can you give me some examples?
Of course! Your owner's policy protects you from problems such as: Forgeries, fraud, undisclosed or missing heir, mistakes in the recording or indexing of legal documents, improper execution of documents, unpaid taxes, assessments, judgements and liens.
It also protects you from unreleased mortgages, mental incompetence of grantors on the deed, impersonation of the true owners by fraudulent people, and the refusal of potential purchaser to accept title based upon the condition of the title.
What can make the title to my home defective?
When you purchase a home, you take "title" to it. Even though the title is searched meticulously, any number of problems that are publicly undisclosed can make a title defective. These are called hidden "defects" and are dangerous because you may not learn of them for months, even years! Once identified, you could spend a substantial sum of money for a legal defense and still lose your home.
Won't the lender's title insurance protect me?
No. Lender's title insurance that the lender has a valid, enforceable lien on the property. Most lenders require this insurance and the borrower must pay for it.
What kind of title problems can arise?
Fraudulent acts by the previous owners such as forged documents that transfer no title to the real estate, forged mortgages, forged satisfactions or releases of mortgages, impersonating the true owners, instruments executed under expired or fabricated power of attorney. Additionally, the deed could have been executed by someone who neglected to get divorced before he remarried.
Or, who did not get divorced and inherited the property as as the surviving spouse. Or, someone who forgot that he previously sold the property to someone else and that person is now in possession of the property. Or, you may have acquired a perfectly good title to a property that has no legal access. These are all common title problems.
What is a "cloud" on the title?
This is an actual or apparent outstanding claim on the title. Examples of clouds are and old mortgage or deed of trust with no recording showing that the secured debt was paid off.
A failure to properly transmit all interests in the property to the previous owner is also a cloud on the title. For example, mineral rights. If a deed was improperly written or signed, or there was an unresolved legal debt or a levy by a creditor or taxing authority "clouds" the title.
The cloud can be quietly removed by finding a person to create or execute a document proving that the debt has been paid or corrected.
Got other questions not listed here? Please call us! We're happy to answer them! 540-414-8763