What is Title?
A title is the evidence or right, which a person has to the ownership and possession of land. A defect in that title can be any legal right held by someone other than the owner to claim property or to make demands on the owner of that property.
What is Title Insurance?
Title Insurance is a contract to protect an owner against losses arising through defects in the title to real estate owned. If the title is insurable, the company guarantees the owner against loss due to any defect in title or expenses in legal defense of the title pursuant to the terms of the policy.
Do I need Title Insurance?
Title Insurance is a means of protecting yourself from financial loss in the event that problems develop regarding the rights to ownership of your property. There may be hidden title defects that even the most careful title search will not reveal. In addition to protection from financial loss, title insurance pays the cost of defending against any covered claim.
What is an American Land Title Association Loan Policy?
An ALTA policy is the most widely used form of title insurance. This insurance policy is a contract that protects a lender against losses arising through defects in the title to real estate. The title insurance company agrees to provide the mortgage holder a legal defense of the title if the validity and enforceability of that lien as insured is challenged. It remains in effect, as of its date, through any foreclosure proceedings and acquisition of title by the lender.
Owners Policy -
An owner’s policy insures the purchaser that the title to the property is free from defects, except those which are listed as exceptions in the policy. It is normally issued in the amount equal to the real estate purchase price and remains in effect for as long as the owner or their heirs retains an interest in the property.
Loan/Mortgage/Lender Policy -
The lender’s policy is separate from the owner’s policy. It assures the validity and enforceability of the lien of the lender’s mortgage or deed of trust and serves as protection for the lender’s security interest in the property. A Loan Policy is issued to the lender in the amount of the loan, and liability decreases as the mortgage debt is reduced.
The difference between a Loan Policy and an Owner’s Policy is the length that each policy stays in effect. A Loan Policy expires when the loan is paid in full and an owner’s policy protects the owner’s in the property for as long as they or their heirs have an interest in the property.
© 2012 Midwest Title Company, Inc.