When you purchase real estate, you expect to obtain clear title to the property which you purchase. Before signing on the dotted lines, it is important to confirm that the seller truly owns the property and is not overlooking certain problems. Title insurance is important because it protects you from these possible undisclosed title problems.

Before title insurance is issued, a careful examination is done of the public records. However, even the most thorough search can sometimes not assure that no title problems are present, despite the knowledge and expertise of an experienced title examiner. Some title problems may exist that cannot be disclosed in a thorough search. Here are just a few of the most common hidden risks that can cause loss of title or create an encumbrance on title:

• Liens for unpaid estate, inheritance, income or gift taxes;
• Fraud;
• Judgments against previous owners;
• False impersonation of the true owner of the property by the seller or other persons previously in title;
• Forged deeds, releases, wills or other documents;
• 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;
• Judgments against previous owners;
• Invalid deed delivered after the death of the grantor;
• Unrecorded easements - giving one party the right to enter another party's property.

1. Lender's/Loan Policy
2. Owner's Policy

A Lender's Policy protects the Mortgage Holder/Lender. When purchasing real estate and obtaining a loan to do so, you will find that your Lender goes through great lengths to protect itself. The Lender tries to minimize its risk of lending you the money you will need to purchase your new home. The Lender does this by checking your credit which is a good indication of your ability as a borrower to repay the loan.

The Mortgage lender is as concerned as the buyer about the quality of the title because the property is to be security for the new mortgage loan. The Mortgage Lender requires assurance that it has a valid first (or another acceptable priority) mortgage lien on the property. This is a legal requirement of regulated mortgage lenders.

What is a Owner's Policy?

An Owner's Policy protects you, the purchaser, against a loss that may occur from a fault in the ownership or interest you have in the property. The Lender's policy does not protect the Owner.

Your Owner's policy will protect you against:

• Financial loss due to demands that may be charged against the title to your home, up to the cost of the title policy;
• Payment of legal costs if the title insurer has to defend your title against a covered claim;
• Payment of successful claims against the title to your home covered by the policy, up to the cost of the policy.

Once purchased, title insurance remains in effect for as long as you own your property. Title insurance adds security and peace of mind to property ownership.