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.
There are two types of title insurance:
1. Lenders Title Insurance (also called loan policy) is typically based on the dollar amount of the loan and protects the lender’s interests in the property should a problem with the title be discovered after closing. The lender requires that the borrower purchase this title policy on behalf of the lender. It DOES NOT protect the buyer/owner of the property.
2. Owner’s Title Insurance is an optional policy and is issued based on the amount of the real estate purchase price. A policy may be purchased at closing for a one time fee and lasts as long as the owner or his/her heirs have an interest in the property. There are two types of Owner’s Title Insurance: 1) Standard policy or 2) Enhanced policy. The Standard policy covers issues that may arise in the chain of title prior to the policy being issued, including third party claims, defective recording of documents, pre-policy forgery, etc. The Enhanced policy covers everything covered under the Standard policy plus some additional items including, post-policy forgery, building permit violations, unrecorded easements, and living trust coverage. The Enhanced policy also provides an automatic increase of coverage to 150% of the original policy value (10% annual increase for the first five years of coverage).
Why You Need Owner’s Title Insurance
What does a title search reveal? A title search can reveal a number of title defects, liens, encumbrances and restrictions. These include unsatisfied or unreleased mortgages, open judgments, ground rents, unpaid income and property taxes, bankruptcies, defective foreclosures, and restrictions limiting the use of the land.
Are there any issues that a title search could miss? Yes, there are several issues that could arise that even the most thorough title search could miss. Among these are fraud, forgery, defective deeds, mental incompetence, missing heirs, and clerical errors. These defects may not reveal themselves until after you settle on your home and could jeopardize your ownership of the property.
I am purchasing a property with someone else, are there various ways to hold title? Yes, you can hold title as joint tenants, tenants in common, or as tenants by the entirety. Please contact our office to discuss your particular situation.
What is a CD (Closing Disclosure)? This is a summary of the financial aspects of the real estate transaction. It will show the purchase price, loan amount, closing costs, and all pro-rations and sums to be disbursed by the title company.
I am refinancing and already have Owner’s Title insurance. Do I need a new Owner’s policy? No. During a refinance, a new loan is obtained. However, the lender will require a Loan policy to protect their interest. If you have a current Owner’s Policy, it may be possible to receive a discounted rate on the Lender’s policy. Please contact our office for more information.
Why You Need Title Insurance on a Refinance
What do I need to bring with me to settlement? You will need to bring a valid government issued photo identification. Any and all monies that are collected during the settlement must be in the form of certified funds which can consist of a cashier’s check, teller’s check, money order, or certified personal check or wired funds to our office. If additional documents are required, we will contact you and let you know what is needed prior to settlement.
Who selects the title company? In Maryland, the buyer for purchase transactions, and borrower for refinance transactions, has the legal right to select the title company. A lender may require that you use a title company that they approve, but in most cases you have the right to select us!
Why choose Lawyers Express Title? We are a small, attorney owned and operated firm. Our paralegal and one of our attorneys handle every file that comes through our door. In today’s real estate and economic environment, many title examinations reveal potential title issues. These issues can include foreclosures, bankruptcies, and tax sales in the chain of title among other things. Our attorneys have the ability to review and identify potential issues effecting title. With their collective legal background, they have the knowledge and ability to resolve most title issues in house.