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Why
Do You Need Title Insurance?
Title
Insurance. It’s a term we hear and see frequently—we
see reference to it in the Sunday real estate section, in
advertisements, in conversations with real estate brokers.
If you’ve purchased a home before, you’re probably
familiar with the benefits and procedures of title insurance.
But if this is your first home, you may wonder, “Why
do I need another insurance policy? It’s just one more
bill to pay.”
The answer is simple: The purchase of a home is most likely
one of the most expensive and important
purchases you will ever make. You, and your mortgage lender,
want to make sure the property is indeed yours— lock,
stock and barrel—and that no individual or government
entity has any right, lien, claim, or encumbrance to your
property.
Title
insurance companies are in business to make sure your rights
and interests to the property are clear, that transfer of
title takes place efficiently and correctly and that your
interests as a home buyer are protected to the maximum degree.
Title
insurance companies provide services to buyers, sellers, real
estate developers, builders, mortgage
lenders and others who have an interest in real estate transfer.
Title companies routinely issue two types of policies—”owner’s,”
which covers you, the home buyer; and “lender’s,”
which covers the bank, savings and loan or other lending institution
over the life of the loan. Both are issued at the time of
purchase for a modest, one-time premium. Before issuing a
policy, however, the title company performs an extensive search
of relevant public records to determine if anyone other than
you has an interest in the property. The search may be performed
by title company personnel using either public records or
more likely, information gathered, reorganized and indexed
in the company’s title “plant.” With such a
thorough examination of records, any title problems usually
can be found and cleared up prior to your purchase of the
property. Once a title policy is issued, if for some reason
any claim which is covered under your title policy is ever
filed against your property, the title company will pay the
legal fee involved in defense of your rights, as well as any
covered loss arising from a valid claim. That protection,
which is in effect as long as you or your heirs own the property,
is yours for a one-time premium paid at the time of purchase.
The fact that title companies work to eliminate risks before
they develop makes the title insurance decidedly different
from other types of insurance you may have purchased. Most
forms of insurance assume risks by providing financial protection
through a pooling of risks for losses arising from an unforeseen
event, say a fire, theft or accident. The purpose of title
insurance, on the other hand, is to eliminate risks and prevent
losses caused by defects in title that happened in the past.
Risks are examined and mitigated before property changes hands.
This risk elimination has benefits to both you,
the home buyer, and the title company: it minimizes the chances
adverse claims might be raised, and by so doing reduces the
number of claims that have to be defended or satisfied. This
keeps costs down for the title company and your title premiums
low.
Buying
a home is a big step emotionally and financially. With title
insurance you are assured that any
valid claim against your property will be borne by the title
company, and that the odds of a claim being filed are slim
indeed. Isn’t sleeping well at night, knowing your home
is yours, reason enough for title insurance?
Reprinted
from California Land Title Association
South
Bay Brokers
1640 So.
Pacific Coast Hwy.
Redondo Beach, CA 90277
(310) 375-0583
(310) 375-9616 Fax
2501 No. Sepulveda Blvd., 2nd Floor
Manhattan Beach, CA 90266
(310) 546-7611
(310) 545-0515 Fax
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