Real Estate Market Statistics September 2014 Phoenix, Arizona

What is title insurance?

Why do I need it?

If you have been doing any amount of research online about purchasing a home, you’ve probably already run into the term “title insurance.”

In almost every real estate transaction, title insurance will be needed and they are considered part of your closing costs.

What is title insurance?

Title insurance assures you, the home buyer that you are acquiring marketable title to your home when you purchase.  Meaning, title insurance protects you from loss and guarantees that your home is free and clear from any “cloud” on title (a.k.a.  potential claim of ownership from someone else).

Title insurance is issued to both you, the home buyer and your lender.  It protects you and your home from (defective) claims from the beginning of time, until you purchase the home.

This means that there are no loans, liens, encumbrances, back taxes, easements or covenants, conditions or restrictions (CC&R’s) on the home that are not disclosed to you prior to your purchase.

What else does title insurance protect you against?

• False impersonation of the true owner of the property
• Forged deeds
• Undisclosed or missing heirs
• Unrecorded legal documents
• Deeds given by someone of unsound mind
• Deeds by minors
• Deeds by someone that represent they are single, but are actually married
• Unpaid liens (taxes, etc…)
• Fraud
• Any lawsuits against your legal ownership of your home

If the company that issues your title insurance is unable to clear up the title problems, they will pay for your losses.

It is therefore, in the title company’s best interest to make sure that the title to your home is free and clear, or they will pay for it.

How does the title company insure that your title is free and clear?

The title company will eliminate risk to a free and clear title by searching the public records for any claim to the title.  They will also search their own database of title information, including public records, court decisions, laws, to ensure correct ownership.

When the title search is completed, your title company will issue a “Title Commitment” and it will detail the current status of the title.

Your Title Commitment will contain very important information about your title, including:

• Current ownership of the property
• Where the owner holds title
• Matters of public record that affect the property or ownership of the property, such as easements, encumbrances, etc…
• A legal description of the property
• A plat map

Click here to see a sample copy of a commitment for title insurance.

Title insurance is for your protection.

The cost of the title insurance policy is a small price to pay for your piece of mind and protection and it insures that you do, indeed, own your own home.