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Title insurance for your assurance

For most people, their home is their biggest single investment - something usually saved for and dreamed of years before the actual purchase is made. But did you know that anytime after purchasing your home there can be complications in the chain of a home’s title that could lead to the loss of your property? That’s why title insurance is so important. The following information is provided to answer questions you may have about the role of title insurance in the purchase of your property.

What is a real estate title?


A title is the right to ownership and possession of a home or property. It is possible that someone other than the owner has a legal right to the property. If that right can be established, this person can claim your property outright or make demands on you as to its use. If that happens, the premium you paid your title insurer, like Allliant National, will defend and protect your ownership, including defending you in the legal system!

What is title insurance?


Title insurance helps buyers realize the dream of home ownership. A title insurance underwriter, such as Alliant National, stands behind the work your title insurance agent has done to assure your right to own your property. For a one-time fee, your Title Insurance Agent will perform an average of 135 comprehensive steps to assure you (the buyer) and your lender that the seller actually has the right to sell the property and then provide insurance protection for as long as you own the property.

All of this is accomplished by a team of competent title professionals at a cost equivalent to a few hours of an attorney’s hourly billable rate! The complex transactions needed to clear your home for purchase must be executed with the highest levels of security, speed, accuracy and integrity, so choosing a reputable title insurance company is critical.

Title insurance assures that:
  • The seller actually has the right to sell you the property before you put your money on the table.
  • The property is transferred to you free of liens or claims of ownership.
  • The transaction is completed quickly and efficiently, on average within 30 days.
  • You’re protected (as is your lender) from fraud.
  • All problems in the title are cleared before the property transfers to your name.
  • Restrictions on the use of the property, like easements or rights-of-way, are disclosed to you before you take ownership.
  • Money entrusted to the agents will be distributed to the proper parties within hours of the closing.
  • In the event an undetected defect arises later, claims are paid and legal representation is provided (at no further cost to you).

Can I choose my own title insurance company?


Yes, although few buyers do. Most choose to purchase title insurance from the company their real estate agent, lender or attorney recommends. Buyers often rely on recommendations from real estate professionals because they are working on many transactions each month and have the experience to recommend a competent title insurance agency. However, a smart buyer will do their own research and be sure of their decision.

Do I have to purchase title insurance?


The legal requirement of obtaining title insurance varies from state to state. However, if you need a mortgage, as most buyers do, your mortgage lender will require this protection for an amount equal to the loan. If you don’t need a mortgage, title insurance is the only way to protect your investment in your property from future claims regarding your title!

What will my title company do for me?


  • Protect and defend you if your title and right to ownership are challenged.
  • Search public records and help solve certain title defects prior to closing.
  • Issue a title commitment – description of proposed policy.
  • Act as an independent central clearing house – collecting necessary documents, following lender’s instructions, making arrangements for proper payments and distribution of funds.
  • Prepare your Closing or Settlement Statement (HUD 1).
  • Coordinate and handle closing of the real estate transaction upon request.
  • Record documents with the proper county.
  • Issue the title policy.

What is a title agent searching for?


Using experience, expert skills and extreme attention to detail, your Title Insurance Agent and their staff of professionals perform an exhaustive search of public records and title plants for judgments, liens and other potential problems with the property. For example, there may be unpaid real estate taxes, or someone years ago may have forged a signature in transferring title. If problems are found, they are resolved prior to purchase to reduce your risk and prepare for the transaction process.

Without this research,your rights to your property could be jeopardized, and your collateral and equity could even be lost. Unfortunately, not all problems with a title are caught in the examination process and even the most thorough search performed by the most experienced examiner may not uncover some obscure detail. Here are some potential hidden hazards that title insurance protects you against down the line:
  • False impersonation of the true owner of the land
  • Forged deeds, releases, etc.
  • Instruments executed under fabricated or expired power of attorney
  • Deeds delivered after death of grantor or grantee or without consent of grantor
  • Deeds to or from a defunct corporation
  • Undisclosed or missing heirs
  • Misinterpretation of wills
  • Deeds by persons of unsound mind
  • Deeds by minors
  • Deeds by aliens
  • Deeds by persons supposedly single but secretly married
  • Birth or adoption of children after date of a will
  • Surviving children omitted from a will
  • Mistakes in recording legal documents
  • Want of jurisdiction of persons in judicial proceedings
  • Discovery of will of apparent intestate
  • Falsification of records
  • Claims of creditors against property sold by heirs or devisees
  • Deeds in lieu of foreclosure given under duress
  • Easements by prescription not discovered by a survey
  • Deed of community property recited to be separate property
  • Errors in tax records, e.g., listing payment against wrong property
  • Deed from a bigamous couple
  • Defective acknowledgements
  • Federal condemnation without filing of notice
  • Corporation franchise taxes, a lien on all corporate assets
  • Erroneous reports furnished by tax officials
  • Administration of estates of persons absent but not deceased
  • Undisclosed divorce of spouse who conveys as consort’s heir
  • Marital rights of spouse purportedly, but not legally, divorced

What does my policy cover?


A title insurance policy states that if you, as insured, suffer a loss as a result of title defects, the insurer will reimburse you for loss up to the face amount of the policy and any related legal expenses.

Are there different types of policies?


The two most common types of title policies are "loan policies," which protect lenders, and "owner's policies," which protect property buyers. Most lending institutions will not loan you money to buy a house or other property unless you purchase a mortgagee policy. This policy will repay the balance of your mortgage if a claim against your property voids your title.

How long am I protected by title insurance?


For a one-time fee, a title insurance policy protects you from any past issues that have occurred with your property for as long as you own the property.

If I already own my property, why do I need title insurance when I refinance my mortgage?


Events that occur after your policy date are not covered by your title insurance. For example, if you fail to pay your income taxes, the IRS could place a lien on your home. This is why a mortgage lender will require new title insurance if you need to refinance. Even though you may have done nothing, a lien by a contractor, taxing authority, HOA or others could have mistakenly been put on your property without your knowledge. Even if you think nothing has happened to compromise your title since you purchased the property, your lender will want assurance that the title is free of defects.

The loan policy required when you refinance not only insures the lender against defects in your title, but also insures against loss if the new loan is not valid or does not have the desired priority. Insuring the validity and priority of the lien is not something covered by your owner's title insurance, nor by any prior loan policy.

Is title insurance regulated?


Yes, title insurance is regulated. The extent and manner of regulation varies greatly from state to state, including a determination of what is covered by the title insurance premium.

In some states, the premium covers the cost of title search, examination and policy issuance. In other states, the premium only covers the cost of insuring and there are separate fees or charges for searching and examining. The service of handling an escrow or closing the real estate transaction is always an additional charge, and these services may be provided by the title agent, an escrow agent or an attorney.

How are title insurance rates set?


Rates also vary from state to state. States like Texas and Florida have rates set by regulatory authorities. Other states, like Colorado, have “file and use” rates that are set by title insurance underwriters and approved by regulators. In general, states require that rates must be reasonable to the public and non-confiscatory to the industry.

Where can I learn more about the rules and regulations of the title insurance industry?


Contact the Department or Division of Insurance in any state for more information.

Texas: http://www.tdi.state.tx.us/title/index.html

Colorado: http://www.dora.state.co.us/insurance/

Florida: http://www.floir.com/

South Carolina: http://doi.sc.gov/Pages/default.aspx

Arizona: http://www.id.state.az.us/

Missouri: http://insurance.mo.gov/

Nevada: http://www.doi.state.nv.us/