Title to property
most accurate description of title is a package of rights in
real property. A title search is the process of determining
from the public records just what these rights are and who
estate has traditionally been a family’s most valuable
asset. It is a form of wealth that is protected by many
laws. These laws 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 determines your future
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.
Will You Get Clear Title?
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
How do you find out what claims exist? (Title search)
order to determine the status of title a diligent search is
conducted of the public records for those documents
associated with the property. This is a history of the
ownership of a particular piece of property. Those documents
found in the public records are then examined 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 the title
title search is a means of determining that the person who
is selling the property really has the right to sell it, and
that the buyer is getting all the rights to the property
(title) that he or she is paying for.
title search also includes a tax search which determines the
present status of general real estate taxes against the
property. It will reveal if taxes are current or whether any
taxes are past due and unpaid from previous years. The tax
search should also indicate any special assessments against
the land and whether they are current or past due.
What about undiscovered claims?
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, incompetence 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, Morgan & Associates
Title Company provides insurance coverage for such claims.
This is the second benefit you receive from title insurance.
How Does a Title Insurance Policy Protect Against All These
claim is made against your insured title, the 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
mortgage lender will usually require a Surveyor to look at
the property to verify the lot size, check the location of
improvements, look for evidence of easements that are not
shown of record and check on who is living there.
purpose of this is to supplement the information learned by
the title search. In the eyes of the law, any buyer of real
estate is assumed to have notice of all matters properly sown
in the public records as to that real estate as well as any
information that an actual inspection may reveal.
the surveyor detects an unrecorded easement or other
evidence of outstanding rights that could affect the owner’s
title and possibly the value and intended use, the company
tells the buyer of these things before he or she closes the
purchase. Those matters must then either be disposed of or
shown as exceptions in the title insurance policy.
these searches have been completed, the title company issues
a commitment to insure, stating the conditions under which
it will insure the title. Closing of the transaction can
proceed after clearing up any defects in the title which may
have been uncovered by the search and examination.
mortgage lender is as concerned as you, the buyer, about the
quality of the title because the property is to be security
for the new mortgage loan. In order to assure their
protection the mortgage lender will always require the buyer
to purchase lenders title insurance.
lender’s title insurance, however, doesn’t protect the new
buyer of the property. Although the land is the same, the
interest of the buyer and the interest of the mortgage
lender are very different. The provisions contained in the
lender’s title insurance policy are very different from
those contained in a buyer’s policy, so the buyer should
obtain his own policy, usually issued simultaneously with
the lender’s policy.