What is Title Insurance?

by | Oct 3, 2015 | Real Estate | 0 comments

Upcoming Free (& non-promotional) Home Buyer Classes: 

 Saturday October 10th , from 9am-12pm (ish)
       Marshall Community Center, conference room
       1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)

Thursday night, October 15 , from 5pm-8pm (ish)
Marshall Community Center, conference room
1009 E. McLoughlin Blvd, Vancouver WA (kitty corner from Clark College)
If these class dates and/or times don’t work for you, please let us know.  We understand that you have lives, and families, and work.  We will work something out that works better with your schedule.  Just let us know….                                                                                  
….we also have home seller classes available too…link on left on website

Remember…with reservation…we will throw in lunch, or dinner!  😀
Hey there!

WHERE IS FALL?!  Don’t get me wrong…this is gorgeous weather, but I am ready for fall…  It still seems absurd to me that we are already in October.  Where did this year go?  Is it just me, or is anyone else feeling this way?  We seem to be careening to the holidays at warp speed.  Which reminds me….don’t forget that we have our next Client Appreciation Event coming up on Saturday, December 19th from 3pm-6pm for the NEW Star Wars!  eeeek!!!  I am so excited….  The client appreciation events are just a small way for Chris Berg & I to say, “thank you”.  Thank you for choosing us as your part of your home adventure team, and THANK you for your continued referrals!!  🙂

Let’s talk a bit about title insurance this week.  Next week we will talk about homeowners insurance.  These two types of insurances are often cause confusion as no one really knows what they are, and what they do.  Let’s see if I can help with that…  

Title Insurance….

There are 3 different insurances which every buyer needs to be aware of….homeowners insurance, mortgage insurance, and title insurance.  A couple of weeks ago I talked about mortgage insurance, so this week I am going to talk about title insurance.  Next week I will talk about homeowners insurance.  

Title insurance is paid for at closing, and is one of those, ‘closing costs’ that we talk about.  This is good insurance for you, but not everyone understands what it does, or how to make sure you are getting the best coverage possible. 

After you have a signed around purchase/sale agreement your agent will take your earnest money check to the title company, and along with the signed around purchase/sale agreement, open escrow with the title company.  We aren’t going to go into the title company’s full job today, but part of this job is to research the property’s title.  

The title company will send you, the buyer, a copy of the title report.  The title report will give you information about the home such as, a map of the property, information about the home, and requests for information from you for the title company.  Please be sure to look it over, and if you have any questions, call your title officer.  Remember that there are 28 people involved in a sale/purchase of a home, and no one gets paid unless you get keys.  We all want you to get keys.  😀

The title report will also talk about title insurance, and this is where we are at today.  One of the responsibilities of the title company, as mentioned above is to research the title….look for any ‘clouds’ on it…anything that isn’t clear.  If the title company misses anything, title insurance protects you, the buyer, from being responsible for something before you owned the property….or so it is in its most protective form.  Let’s say that 6 months after you close and move in, some guy comes to the door telling you that you owe him $8,000 for a roof repair from 1 year ago.  You are floored, and freaked out…of course, and you call everyone you can to see if you are actually responsible for this.  I mean, wasn’t this before you purchased the home?  So how can you be liable?  Well, without the proper protection, you could be!  I can see you now, “say what?!”

There are 3 forms of title insurance…Standard policy, extended policy, and homeowners policy.  

One of the forms that a buyers agent may have you sign is an ‘Optional Clause’ addendum, and on this addendum Standard Policy is checked.  YOU DON’T WANT THIS!  It is cheaper for you, but it would not protect you in the case stated above.  Extended policy seems like a good idea, but can be expensive as it requires a professional survey for the property, and still doesn’t provide you full coverage.  What you want, as a buyer, is the HOMEOWNERS POLICY as this is the most coverage you can get as a homeowner, and would protect you in the situation above.  The difference between standard policy and homeowners policy?  About $60-$80.  Title insurance is only purchased ONCE, and that is at closing.  In Washington, Homeowners Policy is standard, and unless otherwise stated and agreed upon in the purchase/sale, what you will receive from the title company.  Remember that this is one of those costs that is part of closing costs, and as a buyer you should be asking for 3% in closing costs from the seller.  

Again, if you see the Optional Clause addendum, make sure the standard policy is not checked.  If you are purchasing a bank owned home/foreclosure, or sometimes, even a short sale, only a standard policy will be issued.  My advice to you is to ask for the homeowners policy, and if need be, pay the extra amount to fully protect yourself.  

So what is Title Insurance? 

In a nut shell, Title insurance protects you (or your lender) if a lawsuit is filed against the title.
Owner’s title insurance, issued in the amount of the real estate purchase, can be bought for a one-time fee and lasts as long as you or your heirs have an interest in the property. The premium charged varies from state to state, but it is usually 1 percent the purchase price of the property, according to the American Land Title Association (ALTA).

Owner’s title insurance fully protects you if a problem surface with the title that was not uncovered during a title search, and pays for any legal fees involved in defending a claim against your title to the property.
Anything you might want to know about your property or its “chain of title” is usually found in a records search. The one-time fee paid for title insurance goes toward administrative fees for searches at large research facilities where the histories of properties and property titles are stored. In some cases, the chain of title could trace back to the early 1800s or when land records were first recorded in the U.S. That is a lot of paperwork. Short searches are common in residential transactions, including searches one to three deeds deep in the chain.

What does it cover?  
Remember that Homeowners Insurance covers ALL of this, and isn’t that what you want??  Full coverage is good!  🙂
Basic owner’s title insurance: 
 Basic lender’s title insurance: 
 Extended owner’s title insurance: 

  • Title to the property
  • Incorrect signatures on documents
  • Forgery, fraud
  • Defective recordation
  • Restrictive covenants
  • Encumbrances or judgments against the property
  • Mechanic’s liens and unrecorded liens
  • Unrecorded easements and access rights
  • Defects and other unrecorded documents
  • Building-permit violations
  • Subdivision maps
  • Covenant violations
  • Living trusts
  • Structure damage from mineral extractions
  • Encroachments and forgeries after title insurance is issued

Information is power, and I hope that I am able to help you.  Good luck, and as always…May the odds be ever in your favor out there….  If you are looking for a real estate agent, I would love to be able to help you.                                                                       
As always….this is just a quick overview…. please remember that your agent, and your lender work for YOU.  You drive the bus…we are merely GPS to help you get to your goals.  Like the classes, this weekly blog email is to help you with your home adventure.  The goal is to be informative and non-promotional.  🙂  We are, however, hoping you will call and want us to help with your adventure.  

If you have any questions about this, or something you have heard…or if you would like me to help you with your home adventure, please call, email,  text, or facebook me anytime.  I am, as always, happy to help!
Thank you again for your business and your referrals!!  …and thank you for referring these classes to your friends, family, and co-workers. 
 .   ..disclaimer…if you have already purchased a home, or would no longer like to receive these emails, please let me know and I will be happy to remove you from any further mailings… 
 Next Week:   Home Owners Insurance or Home Inspections 101 or “When do I get KEYS?”
Last Week:   Closing Costs…explained                                     
Have a great day, and I will talk to you soon,

Tracie DeMars / Realtor

ReMax Equity Group
License# 81289
Vancouver, WA

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