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What is Title Insurance and Why Do I Need It??

Presented By Insured Titles

Buying a home is, for many of us, the biggest single investment we'll ever make. Knowing this, most homeowners provide for the security and safekeeping of their homes by insuring them against hazards such as fire, theft and weather damage.

But there is another hazard that can pose an even greater risk to homeownership: Defects in the title to your property can cause you to lose part or all of the investment in your home. Fortunately, there is a way to protect your investment from these title defects. It comes in the form of title insurance.

What is title insurance and why do you need it? In the following text, we've covered the basics of title insurance for you. If you would like more information please visit our website at http://www.insuredtitles.com/flathead/ or call us at 406-755-5028.

What is Title?

Title is a term that includes all of your legal rights to own, use and sell a piece of land. The title reflects all previous ownerships and transfers, including rights previously granted by other parties, such as mortgages and easements.

So Why Have a Title?

If there are problems with the title, the ownership of your land could be in question. Some of those problems could include Unpaid taxes, Lien (which is an unpaid claim) filed, Misfiled Deed of Trust, or improper use of a Power of Attorney, to name just a few. A more complete list is located at the bottom of this document. Any of these problems and more could cause a major issue with a piece of property.

What is Title Insurance?

Title Insurance protects you against financial loss due to title defects, liens or other matters of public record. Title insurance will defend you against a lawsuit attacking your title, or reimburse you for the actual money lost. It is a ONE TIME expense at closing.

Before a policy is issued, a title insurance company conducts in-depth research to detect, prevent, and eliminate risks and losses caused by title problems. They do this by searching public records to develop and document the chain of title to the property and by identifying all outstanding claims

Why Title Insurance?

The purpose of title insurance is to protect you and your lender from defects in the title to your home. Your lender will require title insurance before your loan is funded. Without title insurance for yourself, your down payment and any equity created over time is at risk should title defects surface. And once you have title insurance, you are protected from title problems and claims against your property even if they do not surface for decades.

Different Types of Title Insurance

Owner’s Policy protects the home owner for as long as you own the property.

Lender’s Policy protects the lender against any title problems that may affect repayment of the loan.

In Montana the seller “typically” pays for the Owner’s Policy and the buyer pays for the Lender’s Policy if there is one.

For more information on title insurance and frequently asked questions go to http://www.insuredtitles.com/flathead/questions.htm or visit http://www.homeclosing101.org/closing.cfm for more information on the home buying process. For a quote on title insurance contact a licensed title examiner at Insured Titles at 406.755.5028.

Different Problems That Can Occur with a Title

Someone has presented themselves as the true owner of the land, but actually is not.

There are forged title documents.

There are people who claim to have “power of attorney” who don’t really have the legal authority to act for another person.

There are deeds delivered after the death of one of the people involved, without the pre-written consent of the deceased.

It is discovered that a will isn’t legally valid.

A deed is to, or from, a defunct corporation.

There are heirs missing or not disclosed in title documentation.

Wills were misinterpreted.

Deeds were made by people of unsound mind.

Deeds were made by minors.

Deeds were made by non-citizens.

Erroneous reports were furnished by tax officials.

Estates were executed with key people absent.

There is an undisclosed divorce of a spouse who claims to be an heir.

There is a spouse who is supposedly, but not legally, divorced from someone involved in the proceedings.

Children were born or adopted after the date of a will that involved the property.

Surviving children were omitted from a will that involved the property.

Mistakes were made in recording legal documents.

Title records were falsified.

Creditors make claims against a property that was sold by heirs or other people named in a will.

Deeds were made under duress as a last option to foreclosure.

Easements (limited rights for other parties to use the land) exist that were not located by a survey.

A deed incorrectly identifies public property as private property.

There are errors in tax records.

There are deeds from a bigamous couple.

Representations on legal documents (e.g., Notary seals) are invalid or incorrect.

The property was condemned but there is no official record of the condemnation.

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