Frequently Asked Questions About Title Insurance

Title insurance is one of the most important protections in a real estate transaction — and also one of the least understood. Here are answers to the most common questions I hear.

What is title insurance?

Real estate has traditionally been a family's most valuable asset. Title insurance gives you the assurance that possible clouds on title to the property you are purchasing have been called to your attention so defects can be corrected before you buy. It also protects you if any undiscovered claims arise from the past to threaten your ownership — you'll be reimbursed exactly as your policy provides.

How much does title insurance cost?

Unlike most other forms of insurance, you pay a one-time premium. There are no annual payments to keep your Owner's Title Insurance Policy in effect. The premium depends on the type of coverage you and/or your lender request.

Will you get a clear title?

It's of utmost importance that you receive clear title when you purchase real estate. Any rights or claims that are unacceptable must be resolved prior to purchase. Title insurance provides twofold protection: against known recorded defects and against undiscovered hidden risks.

Who is covered?

There are two basic types of title insurance policies:

• Owner's Policy: Generally issued for the purchase price. Protects the purchaser and their heirs as long as they own the property.
• Lender's Policy: Required by most lenders as security for their investment. Issued for the loan amount, typically paid by the borrower.

How do you find out what claims exist?

Chicago Title conducts a diligent search of public records for documents associated with the property, examining them for unpaid taxes, unsatisfied mortgages, judgments, tax liens, easements, restrictions, and court actions. These are reported to you prior to purchase so they can be resolved before closing.

What about undiscovered claims?

"Hidden risks" — such as forgery, fraudulent impersonation, and unknown errors — are not discoverable from public records. Chicago Title provides insurance coverage for such claims.

How does title insurance protect you if a claim is made?

Chicago Title protects you by:

1. Defending your title in court, if necessary, at no cost to you
2. Bearing the cost of settling the case, if it proves valid, to protect your title and maintain your possession

What is a title commitment?

Based on the results of the title examination, Chicago Title issues a Commitment for Title Insurance. This document includes the names of buyers and sellers, type and amounts of coverage, legal description of the property, report of the condition of title, and an agreement to issue a Title Insurance Policy upon payment of the premium.

What are some exceptions to the title policy?

Items typically not covered include:

• Taxes or assessments not shown by the public record
• Errors due to poor surveying, such as faulty boundary lines
• Limitations on land use
• Easements, right of way, and other legal obligations noted in the deed
• Restrictive covenants or agreements limiting uses to your property

Have more questions? I'm always happy to help. Reach me at brenna.harper@ctt.com or 303-748-3965.