The Title Professionals - "We Close The Deal.", Real Estate Settlement

What is Title Insurance and Why is it Necessary?

There are two types of title insurance associated with residential real estate:
1. Lender's Title Insurance and Owner's Title Insurance.
  
  Institutional lenders (and most private ones too) will require a borrower to purchase Lender's Title Insurance for each loan that is secured by real property. The Lender's Title insurance protects the lender by insuring two things: (1) that the borrower is the true owner of the property, and is therefore able to pledge the property as collateral for the loan, and (2) that the lender has a valid, enforceable lien against the property. The Lender's Title Insurance only protects the lender; it does not protect the borrower at all. Most lenders will not make a loan without Lender’s Title Insurance.
  
  Owner's Title Insurance protects the purchaser by insuring the purchaser of the property that the title is clear, and that the purchaser won’t have to pay the legal fees should any future claims or problems arise regarding the title. We highly recommend that anyone purchasing property also purchase Owner’s Title Insurance. Purchasing property in Virginia is a big investment, one that should be protected. The fact that you hold a signed deed to the property does not necessarily mean that you own the property, or that you own the property without the previous liens, taxes, or title problems that were there before you purchased the property. Furthermore, the best title search in the world cannot protect your home (and the equity in your home) from matters not appearing in the public records.
2. An Owner's Title Insurance Policy can protect you from some of the following title problems:
  - Documents executed under false, revoked or expired powers of attorney.
  - Forgery.
  - Undisclosed heirs in the chain of title.
  - Improperly recorded legal documents.
  - Prescriptive rights in another not appearing of record nor disclosed by the survey.
  - Failure to include necessary parties to certain judicial proceedings in the past affecting the title.
  - Defective acknowledgments due to improper or expired notarization.
  - Gaps in the chain of title (meaning that someone along the chain of title who was never deeded the property suddenly deeds the property out).
  - Mistakes and omissions resulting in an improper title abstract.
  - Forged deeds, mortgages, wills, releases of mortgages and other instruments.
  - Deeds by minors (which are void).
  - Inadequate legal descriptions.
  - Errors in tax records.
  - Deeds and mortgages by foreigners who may have lacked the legal capacity to hold title.
  - Deeds by persons falsely representing their marital status.
  - Misinterpretation of wills and ancillary instruments.
  - Forfeitures or real property due to criminal acts.
  - Probate matters.
  - Federal estate and gift tax liens.
  - Rights of divorced parties and community property issues.
  - Duress in execution of wills, deeds and instruments conveying title.
  - Special tax assessments.
  - Real estate homestead exemptions.
  - Issues of adverse possession.
  - Utility easements.
  - Administration of estates and probates of wills of missing persons who are presumed deceased.
  Unfortunately, when we purchase property, the slate is not wiped clean on the title. Matters that happened long before you took title can have devastating consequences. Therefore, we highly recommend that our clients purchase Owner’s Title Insurance. A one time fee buys ongoing protection for the entire time you own the property. The protection even continues after you sell the property, should any title problems arise that result in your liability from before you purchased the property.