What is title insurance?
A Word About Real Estate
Real estate has traditionally been a family's most valuable asset. A form of wealth that
is protected by many laws, which have been enacted to protect one's ownership of real
estate and the improvements located on the land. The owner, the owner's family, and the owner's
heirs have rights or claims in and to the property that you are buying. Those who may have an
interest in or lien upon the property could be governmental bodies, contractors, lenders,
judgment creditors, the Internal Revenue Service, or various other individuals or corporations.
The real estate may be sold to you without the knowledge of the party having a right or claim
in and to the property. In addition, you may purchase the real estate without having any
knowledge of these rights or claims. In either event, these rights or claims remain attached to
the title to the property that you are buying until they are extinguished.
The Past Can Determine Your Future
Generally, a person thinks of insurance in terms of the payment of future loss due to the
occurrence of some future event. For instance, a party obtains automobile insurance in order
to pay for future loss occasioned by a future "fender bender" or for the future theft of the
car. Title insurance is a unique form of insurance. It provides coverage for future claims or
future losses due to title defects which are created by some past event (i.e., event prior to
the acquisition of the property.) These risks are far less obvious than those protected
against by automobile insurance, but can be just as devastating. The following information
will answer some commonly asked questions about title insurance.
Will You Get Clear Title?
It is of utmost importance that you receive clear title to the property when you purchase
real estate. In order to do so, you must first be informed of any existing rights or claims
that may, in the future, threaten your title and possession to the property. Title insurance
provides you with this twofold protection.
How Do You Find Out What Claims Exist?
In order to determine the status of title, Commonwealth Land Title conducts a diligent search of the
public records for those documents associated with the property. Commonwealth Land Title then examines
those recorded documents in order to determine if there are any rights or claims that may have
an impact upon the title to the property. The title search may reveal the existence of recorded
defects, liens or encumbrances upon the title such as unpaid taxes, unsatisfied mortgages,
judgments and tax liens against the current or past owners, easements, restrictions and court
actions. These recorded defects, liens and encumbrances are reported to you prior to your
purchase of the property. Once reported, these matters can be accepted, resolved or
extinguished prior to the closing of the transaction. In addition, you are protected against
any recorded defects, liens or encumbrances upon the title that are unreported to you and which
are within the coverage of the particular policy issued in the transaction. This is the first
benefit you receive from title insurance.
What About Undiscovered Claims?
The title to the property that you have purchased could be seriously threatened or lost
completely by hazards which are considered "hidden risks." "Hidden Risks" are those matters,
rights or claims that are not shown by the public records and, therefore, are not discoverable
by a search and examination of those public records. Matters such as forgery, incompetency or
incapacity of the parties, fraudulent impersonation, and unknown errors in the records are
examples of "hidden risks" which could provide a basis for a claim after you have purchased
the property. In order to protect you against this possibility, Commonwealth Land Title provides
insurance coverage for such claims. This is the second benefit you receive from title
How Does a Title Insurance Policy Protect Against All These Claims?
If a claim is made against your insured title, Commonwealth Land Title Insurance Company protects you
by: (1) Defending your title, in court if necessary, at no cost to you, and (2) Bearing the
cost of settling the case, if it proves valid, in order to protect your title and maintain
your possession of your property.
Title Insurance Protects Your Asset
Title insurance gives you the assurance that possible clouds on title to the property you
are purchasing - which can be discovered from the public records - have been called to your
attention that such defects can be corrected before you buy. Additionally, it is insurance
that if any undiscovered claims covered by your policy arises out of the past to threaten
your ownership of real estate, it will be disposed of, or you will be reimbursed exactly
as your title insurance policy provides.
Only One Premium
Unlike other forms of insurance, the original premium is your only cost as long as you or
your heirs own the property. There are no annual payments to keep your Owner's Title Insurance
Policy in force.