Sunrise Abstracting Corp.

Why Do I Need Title Insurance? Title insurance is used to protect one of the largest investments that a homeowner will ever make. A lender will go to great risk to minimize its risk of losing money for the purchase of real estate. First, credit is checked as an indication of a borrower's ability to repay a loan. Second, the lender seeks assurance that the quality of the title to the property to be acquired and which will be pledged as security for the loan is satisfactory. The lender does this by obtaining a loan policy of title insurance

Does The Loan Policy Protect The Borrower? The loan policy does not protect the borrower. The loan policy only protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist, but may not be known at the time of sale. But this policy only protects the lender's interest. It does not protect the borrower. That is why a real estate purchaser needs an owner's policy, which can be issued at the same time as the loan policy, usually for a nominal one-time fee.​

What Are My Dangers Of Loss? If the lender has title insurance protection and the owner does not, what possible danger of loss exists? As an example, assume real estate was purchased for $100,000. A down payment of $20,000 is made, and a lender holds an $80,000 mortgage lien, or beneficial interest. The lender acquires title insurance protecting the lender's interest up to $80,000. But the purchaser's down payment of $20,000 is not covered. What if some matter arises affecting the past ownership of the property? The title insurance company would defend and protect the interest of the lender. The purchaser; however, would have to assume the financial burden of his/her own legal defense. If the defense is not successful, the result could be a total loss of the title. The title insurance company pays the lender's loss and is entitled to take an assignment of the borrower's debt. The purchaser loses the down payment, other equity in the property that may have accumulated, and the property. In addition, the balance on the note is still due.

Can There Be A Loan Defect If The Title Has Been Searched And A Loan Policy Issued? Title insurance is issued after a careful examination of copies of the public records. but even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.

What Does Title Insurance Protect Me Against?

• False impersonation of the true owner of the property
• Forged deeds, releases or wills
• Undisclosed or missing heirs
• Instruments executed under invalid or expired power of attorney
• Mistakes in recording legal documents
• Misinterpretations of wills
• Deeds by persons of unsound mind
• Deeds by minors
• Deeds by persons supposedly single, but in fact married
• Liens for unpaid estate inheritance, income or gift taxes
• Fraud