What is Title Insurance?
Why do you need Title Insurance?
When you purchase your home how can you be sure there are no problems with the homes title and that the seller really owns the property? This is a common question that comes up more often than you would think in a real estate transaction. Problems with the title can limit your use and enjoyment of the property as well as bring financial loss. This is what title search and title insurance are for.
The Title Search and Owner’s Title Policy
After the contract is accepted and you are in escrow, a title professional will search the public records to look for any problems with the home’s title. This search typically involves a review of land records going back many years. More than 1/3 of all title searches reveal a title problem that title professionals fix before you go to closing. For example, the previous owner may have had minor construction done on the property, but never fully paid the contractor. Another example could be the previous owner failed to pay local or state taxes. Title professionals seek to remedy these situations and bring them to a resolution before closing escrow.
Sometimes title problems occur that could not be found in the public records or are inadvertently missed in the title process. To help protect you in these events, it is recommended that you obtain an Owner’s Policy of Title Insurance to insure you against unforeseen issues that could arise with title.
What is ALTA?
The American Title Association (ALTA), founded in 1907, is the national trade association and is the voice of the title insurance industry. ALTA members search, review and insure land titles to protect home buyers and mortgage lenders who invest in real estate.
ALTA members advocate safe and efficient transfer of real estate and insist on high standards when searching land title records and preparing insurance documents. The industry seeks to eliminate risk before insuring, which provides the insured with the best possible chance of avoiding land title problems. But, title difficulties can and do occur, and members offer both Owner’s and Lender’s title insurance policies as effective safeguards.
*Information provided by Lyon Real Estate Buyers Packet*
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