FREQUENTLY ASKED QUESTIONS
What is a Title?
The word title is a collective term for all your legal rights to own, use, and dispose of land. Title includes all previous ownership, uses, and transfers. To legally transfer real estate property, a title search must be performed and, in most cases, the title must be found free of any circumstances that could endanger your rights of ownership
What is Title Insurance?
You're probably familiar with homeowner's insurance – it protects you against the possibility of future events such as fire or flood. Title insurance is similar in that it protects your home investment, but it protects you against loss from defects that already exist in the title, should your legal rights to your property be challenged. Those hazards could include outstanding mortgages, liens, easements or pending legal action.
What does a lender's policy cover?
The lender's policy protects the lender's interest in the property for the amount of the mortgage loan.
What are concurrent policies?
When an owner's and a lender's policy are issued at the same time, or concurrently, the premium is less expensive than if the two polices are issued separately. Since the title insurance company only has to search the records one time, and because a concurrent policy doesn't increase the risk that much, the concurrent policy premium will generally cost about one third less than two separate policies – remember costs vary depending on location
What types of title insurance are there?
Two types: a lender's policy and an owner's policy.
What does an owner's policy cover?
An owner's policy protects the home buyer's interest in the property against such hidden hazards as:
Mistakes in recording of legal documents
How long does title insurance coverage last?
A lender's policy lasts until the mortgage is paid in full. An owner's policy remains in force as long as you or your heirs have an interest in the property. If challenges to title arise after the property has passed to your heirs, the title insurance company would defend the title for them as it would for you.
What are clouds on a title?
Clouds are liens or judgments on a title. A lien is a claim to property for the payment of a debt, and the lien holder could foreclose on the property if the debt is not paid off. Liens can generally be removed by the payment of the amount owed. This payment can occur before the closing takes place, or at the time of closing.
What is a Title Search?
It is a detailed examination of all available public records on a property to verify the seller's right to transfer ownership and to uncover any potential challenges you might face. A title search should reveal such things as unpaid taxes, unsatisfied mortgages, and judgments against the seller. However, even the diligent search may fail to reveal some hidden hazards, such as those mentioned earlier, and that is when title insurance comes into play.
How long does a title search take?
A title company examiner searches the records of the county recorder, county assessor, and other government taxing agencies to locate any documents which might affect the title to a given property. Depending on the number of documents the examiner must review, a title search will take anywhere from one hour to two weeks to complete. Read this search carefully and look for any hidden problems.
Who determines title insurance rates and fees?
Buyers and sellers often accept these charges without question, accepting the fees as set forth by the title company or closing agent. But title insurance fees are not all alike. The fees may vary from state to state, and may not be set by law in every state. In many states, each title company may set its own rates and then will file those fees with the state insurance commissioner. Once filed, those fees must be adhered to. The key is to ask at the beginning of your escrow what the charge will be, and if your closing agent is charging the lowest rate allowed by state law. Many title companies combine the title insurance premium together with the closing, search and exam fees.
Are there exceptions to title insurance?
Yes, certain exceptions from coverage are a standard practice, but you should be aware of which items are exempted and therefore not covered. Owner's policies usually contain a list of some of the following standard exceptions:
What about undiscovered claims?
The title to the property that you have purchased could be seriously threatened or lost completely by hazards which are considered "hidden risks." "Hidden Risks" are those matters, rights or claims that are not shown by the public records and, therefore, are not discoverable by a search and examination of those public records. Matters such as forgery, incompetency or incapacity of the parties, fraudulent impersonation, and unknown errors in the records are examples of "hidden risks" which could provide a basis for a claim after you have purchased the property. SouthCoast Title provides insurance to protect you against this possibility.
Is title insurance required by law?
Title insurance is not required by law, however almost all lenders will require a lender's title insurance policy as a condition of making their loan to protect their interests. In addition, buyers should always insist upon an owner's title policy to protect their equity in the property. Local custom often dictates who pays for the policy of title insurance, although this may be a negotiable item in your closing.
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SouthCoast Title & Escrow, Inc. is not licensed by the Supreme Court of Rhode Island to practice law in the State of Rhode Island. Legal services are provided by Senerchia & Sheehan, PC.