Frequently
Asked Questions
Why
purchase Owner's Title Insurance?
When
you buy real estate you expect to obtain clear title to the property you
purchase. If challenged and you successfully defend your rights of
ownership in court, there probably will be legal fees and cost to be paid.
If your defense fails, you could lose the property, or at least experience a
serious financial loss. According to title insurance experts, owner's
title insurance is necessary, even if your real estate attorney performs a title
examination and assumes liability for his work.
What
is a title?
A title is the foundation of property ownership. It is the owner's right to
possess and use and transfer the property.
Why
is transferring title to real estate differ from transferring to title to
personal property, such as a car?
Real
estate is permanent and can have many owners over the years, as well as rights
to use the property. In order to transfer clear title to real property, it is
first necessary to determine the rights outstanding on the property.
What
is a title search?
A
title search is a detailed examination of the historical records concerning a
property. These records include deeds, mortgages, court records, property and
name indexes, taxes and many other documents. The purpose of the search is to
verify the property owner's right to sell or finance the property and to
discover any claims or defects to the property.
What
kind of problems can a title search reveal?
A
title search can reveal several types of defects in title, liens, encumbrances
and restrictions. Among these are unpaid taxes, easements, unsatisfied
mortgages, judgments against the property owner and restrictions of use or
transfer.
What
is title insurance?
Title
insurance is a policy of protection against loss if any of the problems listed
above result in a claim against your ownership.
How
does title insurance protect my investment if a claim should arise?
If a
claim is made against your property, title insurance, in accordance with the
policy, will assure your legal defense, including paying court costs and related
fees. If the claim proves valid, you will be reimbursed for your actual loss up
to the face amount of the policy.
What
are the different types of title policies?
There
are two types of title policies- a lender's policy and an owner's policy. The
lender's policy protect the lender's interest in the property as security for
the outstanding balance under the buyer's mortgage. The owner's policy protects
the buyer's investment in the property up to the face amount of the policy.
What
is a HUD Settlement Statement (HUD-1)?
This
is a summary of the financial portion of the real estate transaction. The HUD
will list the purchase price, loan amount, closing costs for both buyer and
seller and show all pro-rations and sums to be disbursed by the title company to
all parties.
What
is pro-ration of property taxes?
This
is the process of charging either the buyer or seller for their share of real
estate taxes owed on the property for their respective time of ownership. Taxes
are said to be "pro-rated" back or forward to the due date of the
property taxes.
What
is pre-paid interest?
This
is interest due from the date of a loan closing to the first day of the
following month. Most loans require payments to be due on the first day of the
month. Each monthly payment reflects the principle and interest due on the loan
for the previous month. A loan closing on the 20th day of the month will require
interest adjustment through the 1st day of the following month. The first
payment will then be due on the 1st day of the month following. Interest
adjustment is considered a settlement charge and will be disclosed on the HUD.
