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I know that lenders protect their interests when providing funds to home buyers by obtaining a loan policy of title insurance. Does this policy cover any of my interest or equity?
No it does not. A lender goes to great lengths to minimize the risk of lending money for the purchase of real estate. First, credit is checked as an indication of the borrower's ability to repay the loan. Then, the lender seeks assurance that the quality of the title to the property to be acquired and which will be pledged as security for the loan is satisfactory. The lender does this by obtaining a loan policy of title insurance. This policy covers only the lender. It is up to you to protect your interests with a title insurance policy of your own.
If I do not have title insurance, what can happen?
As an example, assume real estate was purchased for $100,000. A down payment of $20,000 is made, and a lender holds an $80,000 mortgage lien, or beneficial interest. The lender acquires title insurance protecting the lender's interest up to $80,000, but the purchaser's down payment of $20,000 is not covered. What if some matter arises affecting the past ownership of the property? The title insurance company would defend and protect the interest of the lender. The purchaser, however, would have to assume the financial burden of his or her own legal defense. If the defense is not successful, the result could be a total loss of title.
If I were to lose my property because someone successfully claims right to it, would I still have to pay off my mortgage note?
Yes, you are still liable to the mortgage lender even though you can no longer claim title to the property.
Even if I have no title insurance, the equity I have built up in my house cannot be affected. It is always mine, isn't it?
No, your equity can be affected by a claim to your property's title.
If I purchase title insurance, what can I expect?
Title insurance will pay for defending against any lawsuit attacking the title as insured, and will either clear up title problems or pay the insured's losses up to the policy limits. For a one-time premium, an owner's title insurance policy remains in effect as long as the insured, or the insured's heirs, retain an interest in the property, or have any obligations under a warranty in any conveyance of it. Owner's title insurance, issued simultaneously with a loan policy, is the best title insurance value a property owner can get.
How can there be a title defect if the title has been searched and a loan policy issued?
Title insurance is issued after a careful examination of copies of public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown in public records, other title problems may exist that cannot be disclosed in a search.
Here are some of the more common ways a person can lose title to his or her home:
- Mistakes in recording legal documents.
- False impersonation of the true owner of the property.
- Forged deeds, release, or wills.
- Undisclosed or missing heirs.
- Instruments executed under invalid or expired power of attorney.
- Deeds by persons of unsound mind.
- Deeds by minors.
- Deeds by persons supposedly single, but in fact married.
- Liens for unpaid estate, inheritance, income or gift taxes.
- Fraud.
- Misinterpretation of wills.
What does title insurance cost?
The cost of title insurance varies from state to state. It is regulated in most states, including Ohio.
How is title insurance paid for?
Title insurance is paid for in one lump sum when the home is purchased.
Is there a limit to how long title insurance lasts?
Yes. Title insurance lasts as long as the home is owned by the same owner.
How long will the closing take?
We realize that your time is valuable. We strive to close your transaction in less than 1 hour.
What if my spouse or I cannot attend the scheduled closing?
Contact your attorney or Chicago Title so that accommodations can be made.
Why do I pay a settlement/closing fee?
The fee covers the cost of the closing document preparation, the closing itself and the follow-up that occurs after the closing (loan payoffs, document transmittal and recording).
Who takes care of the existing loans on the property?
Chicago Title takes the responsibility for obtaining payoff amounts and processing them.
How are property taxes handled at the closing?
Taxes are paid and pro-rated per the instructions on the real estate purchase contract.
What is Title Insurance?
Title Insurance assures the buyer that all matters of record affecting the property have been disclosed (liens, judgments, easements, etc.) and that, after closing and recording, the records will show the buyer in title subject to the new mortgage, taxes and other permitted exceptions such as easements and restrictions. Additionally, it insures the buyer against"off-record" matters that may adversely affect the buyer's ownership. Title Insurance will also pay the costs and any attorney fees incurred in defense of the title as insured. And best of all, unlike other forms of insurance, the original premium is your only cost as long as you own the property. There are no annual payments to keep your Owners Title Insurance Policy in force.