Understanding Title Insurance

The purchase of a home for many represents the most valuable asset.  

When you are buying the physical structure as well as the land it is built upon, the land is defined by the deed or property title. Such a title involves its legal history, as it is identified in the title. Should there be a problem with the title that was not disclosed or known or resolved prior to the closing, that problem or defect is the buyer’s responsibility.

Title insurance protects against loss resulting from matters affecting the title to real property. The title insurance policy is an agreement to indemnify the insured for any loss sustained as a result of defects in, or liens upon, the title to real property, which were in existence on the date of the title insurance policy, but were not excluded from coverage by the terms of the policy.

When title insurance is purchased, the title company and its agency should have reviewed the prior history of deed before the purchase of the property. The evaluation of the history of the property ensures that nothing in “the chain of title” will result in a loss to the insured. Often, the title search will reveal a defect. Such a defect must “be cured” prior to the policy date or shown as an exception on the policy.

Since 80% of buyers finance their purchases, most lenders require a title insurance policy to be purchased in the lender’s name, called the loan policy. The loan policy is for the lender and terminates once the loan is paid off. Even though the purchaser pays for the policy at the closing, it does not protect the buyer.

The buyer must purchase a separate policy called the owner’s policy to protect themselves from any defect in the title of that property. Such a policy provides the coverage for the buyer not just for the time you own the property, but for as long as you might be liable to any future owner. Title insurance only requires a single one-time premium payment.

Real estate transactions can be complicated and time consuming, and may involve some degree of risk. If you have questions about purchasing property and title insurance, you should seek advice from an attorney.

If you have any questions about this information or title insurance, please contact Ralph Aponte: 732.914.1400.

Counsellors Title Agency, www.counsellorstitle.net, founded in 1996, is one of New Jersey’s most respected title agencies, serving all 21 New Jersey counties with title insurance, clearing title, escrow, tidelands searches, and closing and settlement services for commercial or industrial properties, waterfront properties and marinas, condominiums, townhouses or residential single family homes. Counsellors Title also features its own Attorney Settlement Assistance Program™ [ASAP], which is an individual resource customized to fit the needs specifically of real estate attorneys, including, Documentation, Preparation, Disbursement of Funds, Attendance at Closing, HUD Preparation or Post-Closing Matters.

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