What is Title Insurance?
Title Insurance is an insurance policy. It protects against loss should the condition of title to land be other than as insured.
Why You Need Title Insurance
When you buy a property, you believe in the certain benefits that come from ownership. You expect to be able to occupy and use the property, to be free from debts and obligations not created or agreed to by you, and to have the ability to sell or pledge your property as security for a loan. Title insurance covers and protects these rights.
Contact your title insurer or agent who issued your policy if you expect a claim to be filed. Title insurance in Northern Colorado includes coverage for legal expenses that may be necessary to investigate, litigate or settle an adverse claim.
The cost varies, depending on the value of your property. You only pay once. The coverage continues in effect for so long as you have an interest in the covered property. If you die, the coverage continues for the benefit of your heirs. If you sell, giving warranties of title to your buyer, your coverage continues. If a buyer has a mortgage to finance a purchase of covered property from you, your coverage will continue to protect your security interest in the property.
Lender’s Policy vs. Owner’s
The lender’s policy only covers the amount of the lender’s loan. In the event of a claim, the lender will not be concerned unless its loan became non-performing, and the claim threatened the ability to foreclose and recover principal and interest. In the event of a claim, there’s no provision for payment of legal expenses for the uninsured. When a loan policy is being issued, the small cost of an owner’s policy is well worth it.
Types of Coverage
Standard coverage covers:
- Forgery or impersonation
- Lack of competency, capacity and legal authority of a party
- Deed is not joined in by a necessary party (co-owner, heir, spouse, corporate officer, or business partner)
- Undisclosed (but recorded) prior mortgage or lien
- Undisclosed (but recorded) easement or use restriction
- Erroneous or inadequate legal descriptions
- Lack of a right of access
- Deed not recorded correctly
An extended coverage policy protects against additional claims such as:
- Off-record issues, such as claims for adverse possession or prescriptive easement
- Deed to land with buildings encroaching on land of another
- Incorrect survey
- Silent (off-record) liens (mechanics’ or estate tax liens)
- Pre-existing violations of subdivision or zoning laws and ordinances
Additional coverages that may be available to you include:
- Post-policy fraud and forgery
- Forced removal of improvements because of lack of building permit (subject to deductible)
- Post-policy construction of improvements by a neighbor onto the insured land
- Location and dimensions of the insured land (survey not required)
The insuring provisions include the coverage afforded by the title insurance policy. There may be exceptions, exclusions and conditions to coverage that could limit or narrow the coverage afforded by the policy. Certain coverage may not be available in a particular area or transaction due to legal, regulatory or underwriting considerations. Please contact a Group Guaranteed Title representative for further information.