What is title insurance and why do I need it?

Simply explained, "title" is the right to own, possess, use, control, and dispose of property. When
you buy a home, you are actually buying the seller’s title to the home. A deed is the written legalevidence that the seller has conveyed his or her ownership rights to you.Before the closing meeting when the actual transfer of ownership occurs, an attorney or titlespecialist generally conducts a title examination. The purpose of the title examination is to discover any problems that might prevent you from getting clear title to the home. Generally, title problemscan be cleared up before settlement. But in some cases, severe title problems can delay settlement, or even cause you to consider voiding your contract with the seller.

What are some common title problems?

Title problems come in all shapes and sizes. Following are just a few examples of situations that

can create a title problem:

· The home to be purchased was owned by the seller’s parents, who intended to use it for their retirement. The seller’s father died several years ago, and the mother just recently passed away. A title search reveals that the property is titled in the mother’s name, but there is no will on file to indicate how she disposed of it.

· You are buying a house to which an addition was made several years ago. The sellers ofthe home took out a home improvement loan and did the work themselves. They haverepaid the loan, but the lien was never removed from the title.

· The seller of the house added central air conditioning several years ago. The seller and the contractor had a dispute over the workmanship, and the seller withheld the final paymenton the contract. The contractor filed a mechanic’s lien on the property, which has never been removed.

· You are buying a house with a newly paved driveway. The seller of the house bought hisneighbor’s share of their shared driveway and converted it into a private driveway whenthe neighbor built a new driveway on the other side of his house. Unfortunately, ownership of the expanded driveway doesn’t appear in the public records.

Some "clouds on title" can be corrected relatively easily, like most of the examples listed above, while others can become quite complicated to remove. You should insist on being kept informed of every step in the title examination process. If title problems are uncovered, it is important for you to understand your legal rights yourself a.

Title insurance is the best way to protect gainst title defects that have occurred in the past, which may not appear until after you’ve taken ownership of the property. Before a title insurance policy is issued, a title report is prepared based on a search of the public records. This report gives a description of the property, along with any title defects, liens, or encumbrances discovered in the course of the title search. Title insurance protects you against title defects that were not discovered in the course of the title search (for example, forged signatures). If such a defect were discovered later, your title insurance would cover you. Title insurance is different than casualty insurance (auto, life, health) in that you pay a one-time fee (which can vary from state to state as well as between insurance companies) and that it protects against past (as opposed to future) events.

How does title insurance protect you?

If title problems are severe enough and not covered by insurance, you could actually lose your house. A title insurance policy protects you and your heirs against title defects for as long as you own the property. The policy represents the title insurance company’s responsibility to compensate

you for any covered loss caused by a defect in the title, or any lien or encumbrance that was not

discovered in the title search. Most title insurance policies do have exceptions, however, so it is important to read and understand the policy. Be sure to call the title company if you have any

questions about what is covered in your particular policy.

If you would like to receive more information on title insurance and escrow fees, please contact me by filling out the below form or call me at 650-464-9645