Questions About Title Insurance

What is title insurance?

Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.

A title insurance policy has a one-time premium and provides coverage for as long as the policyholder or their heirs own the property. There are no annual or monthly premiums after the time of closing when the one-time premium is paid.

Why do I need title insurance?

You probably already know that you should insure your home against damage from fire and weather. Title insurance provides protection from a variety of possible title defects.

The primary function of title insurance is to eliminate risks and prevent losses caused by defects in title arising out of events that occurred before the policy date. The buyer, seller and lender all benefit from title insurance.

Who needs title insurance?

The buyer, seller and lender all benefit from issuance of title insurance.

What is covered by an owner’s policy?

A owner’s policy insures the new owner (buyer) against title defects which consistently arise in more than one third of real estate transactions in the US according to the American Land Title Association (ALTA).

What is covered by a lender’s policy?

A lender’s policy insures that the mortgage is valid and the lien priority is correct. For the homeowner to be covered, he or she must purchase an owner’s policy in addition to the required lender or mortgagee policy.

What steps are involved in buying a home?

Buying a home is an exciting time but the process can be overwhelming, especially the first time. We recommend hiring a real estate agent to help guide you through the process which includes getting qualified for a loan and searching for a home that fits your needs and budget.

When you choose a home, your real estate agent will make an offer on your behalf to the seller. This may lead to a counter offer where the seller tries to negotiate a purchase price closer to their original asking price.

Once both parties agree on an amount, a title insurance agent and/or escrow officer must draft all the necessary paperwork. They will then schedule a date for you and the seller to meet for the closing, where the transaction is completed and ownership is officially transferred from seller to buyer.

What steps are involved in selling a home?

The first step in selling your home is establishing the asking price. Most sellers hire a real estate agent to help market their property, arrange viewings, and negotiate the transaction. Realtors are paid a percentage of the sale price as a commission for their service.

Once a prospect makes you an offer, you can either accept the proposed purchase price or make a counteroffer. When you agree on a price, a title insurance agent and/or escrow officer must draft all necessary paperwork. They will then schedule a date for you and the buyer to meet for the closing, where the transaction is completed and ownership is officially transferred from seller to buyer.

What does a home warranty cover?

Home warranties provide peace of mind to buyers and add value to their property for sellers. A home warranty covers a home’s appliances and major systems, such as air conditioning, heating, electrical and plumbing. Coverage offered varies by package and state.

Does Lighthouse Title offer legal services?

No. We are not attorneys. As a title insurance agency, we maintain a neutral position and are responsible for guiding the transaction without a conflict of interest.

What is escrow?

Escrow is process in which the funds of a transaction are held by a third party. Once the transaction is completed and all documents are recorded, escrow funds are distributed.

What is a title search?

A title search is the process of searching public records for debts, legal judgements, and other potential defects that would prevent you from securing clear title to your property. Some of the items reviewed in a title search include: prior deeds, mortgages, divorce decrees, court judgments, delinquent taxes, and child support payments. Covenants, conditions, and other types of easements are also examined.

According to the American Land Title Association (ALTA), title problems consistently arise in more one third of all real estate transactions in the US. These problems need to be “cleared” before the deal can close.
When Lighthouse Title discovers an issue, we take care of it —typically without you even knowing about it. If the problem is not easily resolved then you will be notified while we work toward a resolution.

What are common problems with title?

Laws vary from municipality to municipality. HOAs have their own guidelines. For countless reasons, every real estate transaction is unique.

Some common problems we discover and resolve include:

Forged documents
Liens against the property
Mineral rights and utility easements
Unknown heirs of deceased property owners
Documents signed by minors
Deeds executed under an expired power of attorney
Mistakes on the public record

How would I file a title insurance claim?

If you have a question or concern about your rights, notify us immediately. It’s helpful to provide the property address along with a brief statement about your situation.

What kind things are covered by title insurance?

Subject to certain limitations, your policy protects you from many issues that could arise relating to legal ownership of your home.

Undisclosed heirs
Improperly recorded legal documents
Prescriptive rights in another not appearing of record and not disclosed by survey
Failure to include necessary parties to certain judicial proceedings
Defective acknowledgements due to improper or expired notarization
Corporate franchise taxes as liens on corporate real estate assets
Gaps in the chain of title
Mistakes and omissions resulting in improper abstracting
Forged deeds, mortgages, wills, releases of mortgages and other instruments
Deeds by minors
Deeds which appear absolute, but which are held to be equitable mortgages
Conveyances by an heir, devisee or survivor of a joint estate who attempts to attain title by ill-gotten means
Inadequate legal descriptions
Conveyances by undisclosed divorced spouses
Duress in execution of wills, deeds and instruments conveying or establishing title Issues involving delivery of conveyancing instruments
Deeds and wills by persons lacking legal capacity
State inheritance and gift tax liens
Errors in tax records
Demolition and substandard building liens
Administration of estates and probate of wills of missing persons who are presumed deceased Issues of rightful possession of the land Issues concerning the rightful conveyances by corporate entities
Deeds and mortgages by foreigners who may lack legal capacity to hold title Legal capacity of foreign personal representatives and trustees Issues involving improper marital status
Improper modification of documents
Rights of divorced parties
Conveyances in violation of public policy
Misinterpretation of wills and ancillary instruments Deeds by persons falsely representing their marital status
Claims by creditors of decedent against property improperly conveyed by heirs and devisees Issues concerning unlawful takings by eminent domain or condemnation
Special tax assessments
Real estate homestead exemptions
Forfeitures of real property due to criminal acts Issues concerning adoption of children
Conveyances and proceedings affecting rights of military personnel protected by the Soldiers’ and Sailors’ Civil Relief Act
Issues concerning interests noted in financial statements filed under Uniform Commercial Code
Interests arising by deeds of fictitious parties
Adverse possession
Lack of jurisdiction or competency of persons in judicial proceedings
Community property issues
Utility easements
False affidavits of death or heirship Intestate estates
Probate matters
Federal estate and gift tax liens