What is Home Owners Title Insurance?
Title Insurance is an essential part of virtually every transfer of ownership. Unlike most insurances that protect against risk of future events, Title Insurance exists to eliminate losses due to defects in title which occur as a result of things that happened in the past. Even the most careful title search will not reveal some situations or events that could cast doubt on your title to the property.
Some of these are:
- Mistakes in the public record
- Fraudulent or forged title instruments
- Undisclosed heirs
- Adverse possession
- Undisclosed prescriptive rights
The title examiner is not liable for such matters.
Title Insurance, generally, will protect the insured party from financial loss or damage for covered risks up to the policy limits. Such expenses typically include attorney’s fees in defense of title and the payment of monetary claims.
Who Does Title Insurance Protect?
Both the lender and the owner have an interest in the owner’s clear title to the property. Since home owner’s Title Insurance is optional in Virginia, separate title insurance policies are available. Generally, if the purchaser is financing any portion of the purchase price, a lender will require that a Lender’s Title Insurance Policy be issued to insure the lender to the maximum amount of loan. Thought this policy protects the lender, it is the owner who will pay the premium at settlement as one of the costs of obtaining the loan.
For the property owner to be protected, the owner must elect a separate Home Owner’s Title Insurance Policy which protects the owner up to the face value of the policy (usually the purchase price). While in Virginia a purchaser is not required to buy an Owner’s Policy, it is highly recommended that the purchaser does so. Both, minor defects and catastrophic title failures are insured against by the single-premium-payment charged at closing. The policy’s protections extend beyond the period of ownership and continue to defend your estate for years to come.
For more information please refer to American Land Title Association’s website.
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