Frequently Asked Questions
What is the difference between auto/homeowners insurance and title insurance?
Title insurance is a loss prevention insurance where the majority of the premium is spent upfront in research and correction of title issues to protect against future loss. Auto and homeowners insurance are intended to payoff loss once an accident or property damage has occurred.
Other types of insurance will usually have an ongoing premium due, however title insurance premiums are a one time premium paid at the time of purchase or refinance (each loan refinance may require a new policy to be issued so a premium for the new policy would need to be paid.)
What are some “issues” that may affect a buyer from receiving “clear title”?
| *Forged deeds, mortgages, satisfactions or releases. | |
| *Deeds not allowed by law, for example: | |
| Deed by a minor | |
| Deed by unauthorized trustee | |
| Deeds not signed by all grantors with interest in the property | |
| *Outstanding tax warrants | |
| *Delinquent real estate taxes. | |
| *Errors in recorded documents | |
| *Outstanding judgments that may attach to property |  |
Who chooses the title company to be used for a sale or refinance?
Homeowners always have the right to choose which title insurance provider is used in a transaction. Sellers often will rely on their Realtor to help select a title insurer, but it is a gross violation of federal law to require a homeowner to use a particular title insurer. A seller should be made aware of any affiliated business relationship between a Realtor and a particular title company being referred.
Section 9 of the Real Estate Settlement Procedures Act (RESPA) also allows for buyers in a transaction to choose their own title insurer, which does not have to be the same as the insurer that the seller uses. The seller can only dictate the buyers insurer if they are paying the entire cost of the insurance. Sellers cannot require a buyer to use a particular insurer, either directly or indirectly, as a condition of sale.
Why did Title Insurance start?
Prior to the invention of title insurance buyers in real estate transactions bore sole responsibility for ensuring the validity of the land title held by the seller. If the title later determined to be fraudulent or with attached liens, the buyer lost his investment.
Back in the early days of this country both Tom Lincoln (Abe Lincoln’s father) and Daniel Boone lost their property do to title defects, they had the “wrong the right kind of papers”.
