What is title insurance and why do I need it?

With all the varieties of insurance available in the world today, it can be very confusing to understand the different types. Title Insurance is an insurance policy, issued by a title insurance agent, which protects you and your lender if someone challenges title to your property because of title defects that were unknown when you bought the policy. Before issuing a policy, the title company checks for defects in your title by examining public records, including deeds, mortgages, wills, divorce decrees, court judgments, tax records, liens, encumbrances, and maps. The title search determines who owns the property, what outstanding debts are against it, and the condition of the title. Before closing the transaction, the title company works hard to fix and eliminate title defects that have been found. The title company also handles the property closing and holds earnest money in a trust account until the transaction is complete. Even the most meticulous title search can miss defects in title. Your title insurance policy defends you in a lawsuit attacking your title. It either corrects the title problem, or pays the losses incurred by the insured, up to the amount of the policy, including attorney and court expenses, subject to the terms and exceptions set out in your policy. What title insurance protects against Here are just a few of the most common hidden risks that can cause a failure of title or create an encumbrance on title: Forged deeds, releases, wills or other legal documents. Incorrect instruments executed under invalid or expired power of attorney; Undisclosed or missing heirs Deeds from minors, illegal aliens or persons of unsound mind Failure of spouses to join in conveyances Mistakes in recording or indexing legal documents Erroneous reports furnished by tax officials Deeds from defunct corporations Fraud Liens for unpaid estate, inheritance, income or gift taxes What protection does title insurance provide against defects and hidden risks? Title insurance will pay for defending against a lawsuit attacking your title as insured, and will either clear up title problems or pay the insured's losses. For a one-time premium, an owner's title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.

Meridian Abstract & Title Company