Title Insurance and Why You Need It
There are two kinds of title insurance. Mortgagee Title insurance protects the interests of the mortgage lender in the event it is determined a title is defective, despite the best efforts of a competent examiner who conducts a thorough search, while owner’s title insurance protects the interests of the buyer. Both types of title insurance are necessary to protect against hidden defects in the title. Title insurance is purchased at settlement and requires only a one-time premium.
Hidden defects in the title – for example, such as forged deeds, undisclosed or missing heirs, the rights of divorced persons, fraudulent court proceedings, mistakes in recording legal documents, even typographical errors – can give rise to claims against the title. These claims can limit the buyer’s use and enjoyment of the property and bring financial loss as well as threaten the security interest of the mortgage lender, and they are normally quite expensive to litigate.
Title insurance offers financial protection against hidden defects in the title through negotiation with third parties by the title insurer, through payment for defending against claims, and through payment of claims. And with title insurance, lenders are willing to make mortgage money available because they know your investment is protected.
When an owner’s policy and one or more mortgagee policies covering identical land are issued simultaneously, the rates applicable for the owner’s policy shall be regular owner’s rates. The premium for any loan policies so simultaneously issued will be $50.00 each for the aggregate amount of insurance not in excess of the owner’s policy.
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