Engel Volkers Buyer & Seller Guide Bozeman - Manual / Resource - Page 73
E n g E l & Vö l k E r s | B U Y E r s g U I D E
Title insurance
title insurance is a form of indemnity insurance that protects lenders and homebuyers from financial loss
sustained from defects in a title to a property.
Why do I need title insurance?
many homeowners assume that when they purchase a piece of property that possession of a deed to the property is all they
need to prove ownership, but title insurance serves as basic risk elimination. a Preliminary Title report outlines the conditions
under which a title will be insured. once the new deed and loan documents are recorded, a title insurance policy is issued to
the new owner and lender. this protects both parties against loss due to title defects. any undisclosed claim (covered by the
owner’s policy of title insurance) that threatens ownership of the home will be dealt with or will be reimbursed exactly as the
policy of title insurance provides.
What protection is obtained with a title policy?
title insurance offers protection against claims resulting from various defects (as set out in the policy) which may exist in the
title to a specific parcel of real property, effective on the issue date of the policy. For example, a person might claim to have
a deed or lease giving them ownership or the right to possess your property. or perhaps a person claims to hold an easement
giving them a right of access across your land, or claims to have a lien on your property securing repayment of a debt. a title
insurance policy contains provisions for the payment of the legal fees in defense of a claim against the property covered
under the policy. it also contains provisions for indemnification against losses, which result from a covered claim.
What does a title company do?
simply put, whenever someone decides to buy or refinance property, title companies have the ability to check public records
regarding the history of that property. looking for unclear liens, claims or easements are part of what we do. sometimes
distant relatives may have a claim on the property without the seller’s knowledge. People have even fraudulently sold houses
that do not belong to them. a title company performs a vital, yet hidden role in guaranteeing the security of your home. Just
like car insurance, you never realize how important it is until the unexpected happens. This is why lenders require title
insurance to protect the lender against loss due to unknown title defects.
many title companies also offer escrow services. when buying, selling or refinancing real estate, a neutral third party is
needed to handle all deposits of funds, documents, special reports and other important papers. it is also the escrow officer
you will meet with to sign all the documents prior to your property closing escrow.
What protection will I receive from my title policy?
a title insurance Policy pays for legal fees in defense of a claim against property covered under your policy. it also contains
provisions for indemnification against losses that result from a claim. the title insurance premium is paid at the close of
escrow and no additional premiums are paid as long as you own the property.
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