FAQs

An abstract is a summary of the title to a piece of property. The original documents pertaining to the title are filed in the office of the Clerk of Court.

The basic information on a piece of property includes:

• Location and dimensions – address, lot, square and subdivision, acreage in section, township, and range
• Names of parties to the transaction including first, middle/maiden, and last name (also includes marital status)
• Consideration (price paid)
• Other terms of the transaction
• Mortgages, liens, or other encumbrances affecting the piece of property
• Status of property taxes

A Title Commitment is a promise to issue an insurance policy on a piece of property. It is equivalent to a binder for other types of insurance, which commits, or binds, the insurance company to issue the policy as set forth in the commitment.

Who is being insured: generally, the lender and any future investors are the insured, along with the purchasers of the property, assuming an Owner’s Policy is being issued.

The amount of the insurance: typically, this is the loan amount for the mortgagee, or in the case of a cash sale, it is the sales price for the owner.

Title insurance offers protection from a number of risks that can arise in a real estate transaction. These risks can cause problems throughout the home-buying process for the buyer and/or lender.
The following are just a few examples:

• Clerical error
• Forgery, fraud, incompetency, and incapacity
• Lack of legal access to the property
• “Missing links” in the chain of title
• Unknown heirs to property due to successions, improper identification of owners, etc.
• Surveyor errors

Click here to see additional ways you could lose your property.

The two most common types of title insurance policies are:

• Mortgagee: Almost always required by the lender, this policy protects the lender’s interest in the property up to the amount of the loan. This policy must be purchased every time a borrower gets a new loan on a piece of property. It protects the lender and terminates when the loan is paid off.
• Owner: Owner’s title insurance protects the owner against title defects for as long as he owns the property. When purchased at the same time as the mortgagee’s policy, it is usually considerably less expensive than when purchased separately.

New homebuilders may also purchase lien coverage, which provides additional insurance to an owner or lender during the construction of a new home. This protects against the event of any liens being in place on the property for non-payment of labor or materials during construction.

Anyone who is purchasing property can benefit from investing in title insurance. Even the most careful search of the records may not reveal all title issues until many years later, possibly when you try to resale.

The cost of title insurance depends on the purchase price of the property.

There is a one-time fee paid upon purchasing the title insurance policy, usually at closing.

Yes; however, the title review must be up to date and current through the date that the policy is purchased (i.e., the title will have to be reviewed again up to the date of the title insurance purchase).

A legal claim against property that must be satisfied when the property is sold. A claim of money against a property, wherein the value of the property is used as security in repayment of a debt. A lien is a defect on the title and needs to be settled before transfer of ownership. A lien release is a written report of the settlement of a lien and is recorded in the public record as evidence of payment.

Lien coverage may be purchased during the construction of a new home to provide additional insurance to an owner or lender for protection if any liens are place on the property.

Once all of the proper documents and loan information have been gathered, verified, and approved, a closing can begin. In simple terms, a closing is defined by Merriam-Webster as “the final phase of a transaction, especially the meeting at which procedures are carried out in the execution of a contract for the sale of real estate.” Typically, a closing agent – either a title insurance company or an attorney – will handle the closing.

The process involves all applicable parties and usually takes place in the closing agent’s office. Once gathered together, all necessary documents, including the deed, are inspected, discussed, and finally signed before the funds for the sale are released to the closing agent. Copies are made of all paperwork, for the records of both the buyer and the seller, while the official documents are filed away with their appropriate government agencies. Congratulations on your real estate purchase!