What Is Title Insurance Policy?
Title Insurance Policy Explained:
An owner’s policy protects only the owner while a mortgage policy protects only the holder of the mortgage on the property. Separate policies are required to protect both interests. Special rates are available when both owners and mortgage policies are applied at the same time.
The owner’s policy of title insurance usually is issued after the deed to the buyer is delivered and recorded. A purchasers policy is usually issued after the contract has been executed by both parties or after the signed contract has been recorded. The mortgage policy of title insurance is usually issued after the mortgage or deed of trust has been properly executed and recorded. All mortgage lenders require clean title and no clouds on title before it issues a clear to close and prior to funding the mortgage loan. In the event if there is liens or clouds on title but is not caught by the title company after issuance of title insurance policy, it is the responsibility of the title company to correct the liens or clouds on the title to the property and make sure it is clean and clear of all liens and clouds.
Coverage Of Title Insurance Policy
The coverage of your policy is against all matters that appeared of record up to the date of issuance of your title insurance policy. Since that time many documents may have been recorded, some of which may affect the title to your land. Taxes and assessments may have accrued and be unpaid. There may have been actions in court affecting your title. The purchaser is entitled to have full information and protection as to the condition of the title right up to the date of his purchase. In addition, there may be matters of record which would prevent either the seller or buyer from selling, buying or mortgaging land until such matters have been cleared. These items include such things as federal tax liens, judgments, incompetence, divorce actions and other conditions which the title search may disclose.