Title Insurance Protection Is Required By All Lenders

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Title Insurance Protection Is Required By All Lenders

This BLOG On Title Insurance Protection Is Required By All Lenders Was Updated On November 17th, 2018

Title Insurance Protection Explained:

  • Title Insurance Protection insures that the “record” title is good subject only to the exceptions expressly set out in the title insurance protection policy
  • It also insures against certain matters which do not appear of record, such as the following:
    • forgery
    • identity of parties
    • incompetence and negligence of former owners
    • interest of missing heirs
    • status of individuals not having the “right” to sell property
    • other flaws on title of property
  • All lenders require clean title before the mortgage loan underwriter issues a clear to close.
  • Most mortgage loan closings are closed at title companies
  • The title company agent conducts the closing
  • The title company insures that the title to the property is clear of any and all liens
  • Guarantees there are no clouds on title to the subject property
  • In the event if there are liens on title and it does not appear until after the closing of the property, then it is the title company that insures this
  • So the title company needs to clear up and liens to the property
  • Title searches are extensive
  • Third party firms are contracted when reviewing titles to the properties in question

Owners Of Title Insurance Protection

The standard owners title insurance policy and standard mortgage policy are based on public records of the recording district in which the land is located.

It does not insure against matters which would only be disclosed by actual inspection or survey of the property.

  • It does not insure against certain matters not shown by the public records such as the following:
    • unrecorded easements
    • liens or money obligations
    • unrecorded utility rights of way public or private roads
    • community driveways and other types of encumbrances
    • or against the rights or claims of persons in possession of the property which are not shown by the public records
  • Upon application, the issuing company may specially cover matters which are disclosed by a physical inspection
  • And/or a survey of the property, subject to any exceptions which the inspection will determine to be proper
  • An additional risk premium is charged for this type of coverage
  • Insurance of this kind is called extended coverage

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