When acquiring property, it’s a good idea to get your own title insurance policy. It will give you peace of mind and maximum protection in case there is a claim against your home.
What Risks Are Covered?
That depends on the policy. Coverage typically protects against four “hidden risks.”
- Errors – incorrect information in deeds, mortgages, public records, etc. (such as wrong names)
- Liens – claims against the property or seller, which become the new owner’s responsibility after the sale. Examples are unpaid mortgages, taxes, water assessments, bills owned by workers or other creditors, etc.
- Claims to Ownership -for example, a claim to “martial interest” by the spouse of a former owner who was not mentioned in their parents’ wills.
- Invalid Deeds-for example, transfer by a previous seller who did not actually own the property, or by a previous owner who was not mentally competent. Many of these problems may not be discovered in a routine title search.
These risks may not be covered by your title insurance policy. Standard exclusions often appear as part of the printed form. For example:
- Limitations on land use, such as laws against farm animals.
- Mechanics’ liens, such as unpaid construction or repair bills.
Exceptions are also written into your specific policy, based on defects found in the title search. For example:
- Easements, rights of way, and other legal obligations are noted in the deed or in the public records.
- “Restrictive Covenants”, agreements limiting certain types of use of your property.
Your Insurance Company may remove some exceptions if you request it.