What is Title Insurance?
Title insurance is a contractual obligation between a homeowner and/or lender and the title insurance company, wherein the insurer, in exchange for a premium payment, provides protection against future losses that might result from a variety of possible title defects or encumbrances that existed at the time of closing.
Before you purchased your home, it may have gone through several ownership changes, and the land on which it stands went through many more. There may be a weak link at any point in the chain that could emerge to cause trouble. For example, someone along the way may have forged a signature in transferring title. Or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party for any claims and legal fees that arise out of such problems.
What will Title Insurance protect me from?
Some common examples of problems covered by title insurance include:
- Improper execution of documents
- Mistakes in recording of legal documents
- Mistakes in the indexing of legal documents
- Mistakes in legal descriptions of property
- Forgeries and fraud
- Undisclosed or missing heirs
- Unpaid taxes and assessments
- Unpaid judgments and liens
- Unreleased mortgages
- Incorrect interpretation of wills
- Mental incompetence of grantors of property
- Impersonation of the true owners of the land by fraudulent persons
- Fraud in securing essential signatures
- Refusal of lender to provide financing based upon condition of title
- Refusal of potential purchaser to accept title based upon condition of title
If my title has been examined for defects, why do I need Title Insurance?
There are some title defects that cannot be uncovered with even the most thorough search. For example, a search will not uncover that a valid deed was indexed improperly in the land records. Title insurance will protect you from these types of defects.
Do I have to purchase Title Insurance?
Although highly recommended by experts, you do not have to purchase title insurance if the buyer is paying cash for a home. The vast majority of banks and other mortgage lenders, however, require that the borrower obtain a Lender's Policy of Title Insurance equal to the loan amount.
What is the difference between a Lender's Policy and an Owner's Policy?
A lender's policy protects the lender up to the amount of their outstanding debt on a mortgaged property. The value of the policy decreases as the loan principal is paid down and expires when the mortgage is paid in full. An owner's policy is purchased in an amount equal to the purchase price and does not expire when the mortgage loan is paid in full or upon the sale of the property. The owner's policy is there to protect the owner's equity in the property.
Who pays for Title Insurance?
Often, local custom dictates whether the buyer or seller pays for the premium, but sometimes sellers and buyers negotiate who will pay the premium without regard for local customs and procedures. Be sure to ask your real estate professionals what is predominant in your area.
Do I have to use the Title Insurance Company recommended by my attorney, lender, or realtor?
No. You have the absolute right to choose your own title insurance company. Simply provide your attorney, lender, or realtor with the "Certificate of Entitlement" that is available to be printed from this site early in the closing process to avoid confusion. Also, if anyone insists that you use a company they recommend, it's in your best interest to ask them if they are receiving a commission or referral fee from the company or if they are affiliated with the company they are recommending. Title agent commissions can be as high as 90 percent of the title premium you are being asked to pay.
What is a Demotech Financial Stability Rating®?
A Financial Stability Rating ® (FSR) is a leading indicator of an insurer's stability. FSRs are based upon a series of quantitative ratios and considerations which together comprise Demotech's Financial Stability Analysis Model. FSRs are accepted by government-sponsored enterprises, including Fannie Mae, Freddie Mac, and various programs of the United States Department of Housing and Urban Development (HUD), mortgage lenders, as well as a number of umbrella and agents errors and omissions insurance markets. EnTitle Insurance Company currently has an A', Unsurpassed, FSR from Demotech, Inc.
Will my lender accept a Title Insurance Policy purchased through ENTITLE DIRECT?
EnTitle Insurance Company has worked with nearly every major lender over its 35-year history. Based on EnTitle Insurance Company's financial strength, stability and experience it is recognized and accepted by nearly every major lender. Call us today at 1-877-936-8485 to learn how we can save you hundreds if not thousands of dollars on your closing.
When do I purchase Title Insurance?
While the title insurance policy is issued at closing for a one-time premium, based upon the loan amount and/or purchase price, one should start shopping for title very early in the home buying/selling refinance process as possible. The preparation that leads to the title insurance policy being issued begins in the very early stages of the closing process. Your ENTITLE DIRECT Closing Specialist will determine when the best time is to order your title search. Call 1-877-936-8485 today to get a free title insurance quote and for more information on when to order title insurance.
ENTITLE DIRECT offers some of the lowest prices in the industry. We encourage you to compare our prices with those of our competitors. To avoid any confusion, let your attorney, realtor, and lender know that you are going to purchase your title insurance through ENTITLE DIRECT as early as possible. For your convenience, please click here for your Certificate of Entitlement.
Are Title Insurance Policies the same from company to company?
Title insurance companies offer industry-standard title policies adopted by the American Land Title Association (ALTA) or an individual state's land title association. You can be assured that the policy protection provided in an ENTITLE DIRECT policy is identical to that of our competitors.
What is the difference between a "Basic Owner's Policy" and an "Enhanced Owner's Policy"?
As its name suggests, enhanced policies provide the owner additional coverages. The quote you receive on our website is for a Basic policy which is provided at a considerable savings over that of our competition. You will find that ENTITLE DIRECT's enhanced policies are offered at rates below even our competitor's basic policy.
Examples of coverage included in an enhanced policy that are not covered by a basic policy, include:
- Mechanic's Lien Coverage for work provided prior to the date of the policy
- Zoning coverage to ensure that your property is zoned for a single-family residence
- Coverage that your property is in a properly created sub-division
- Coverage in the event that you are required to remove an existing structure on the property (other than a fence or boundary wall) due to a previous owner's failure to obtain the necessary permits
- Post-closing forgeries that affect your ownership interest
What can I expect at the settlement or closing for a purchase transaction?
While settlement / closing practices may vary from state to state, the following representatives are generally present at the closing for a purchase transaction:
- Home buyer, Home seller, seller's real estate agent, buyer’s real estate agent
- Title company representative (where applicable)
- Attorney(s): The buyer, seller and lender may have attorneys
- Closing agent: The agent conducts the closing and ensures all documents are signed properly
- Mortgagor (the person buying the house) and Mortgagee (the lender)
At the closing, the seller signs documents transferring property ownership to the buyer. The buyer receives as well as sign documents related to the mortgage agreement and ownership of the property.The buyer also pays any closing costs and escrow payments. These documents include:
- The HUD-1 settlement statement
- Final Truth in Lending Act statement
- Mortgage note stating the buyer's promise to repay the loan amount
- Mortgage or deed of trust securing the mortgage note
- Any additional documents required by the lender