In real estate, Title refers the ownership of land or space above land. Specifically, it refers to the owner’s bundle of legal rights to the land or space (the rights of possession, control, enjoyment, etc.). Title may also refer to the evidence of that ownership, this ownership of title is displayed in a title binder for a private or commercial entity to hold, however it is not a public record. The written document by which an owner of real property conveys (sells) the ownership of a parcel to another owner (buyer) is called a “deed”. A Deed is the equivalent to the Sun of the Title cosmos. Everything orbits around the Deed. Transferring the title from a seller to a buyer is the heart and soul of the real estate property transactions. Each transfer creates a link in what is called the “chain of title”, which is the record of a property’s ownership over time. When you hear the term “chain of title,” it refers the changing of ownership through the years which is linked to every time a Deed is signed over to a new owner. Title companies research this chain of deed links to look for defects. This research is an attempt to protect the buyer from problems within the chain and try to ensure the buyer that the property is clear and not cloudy regarding ownership and other encumbrances that may come up during the process or in the future.
Most Insurance covers future events and tries to protect clients through eliminating potential risk. One pays monthly or annual premiums to protect against a problem that arises. Title Insurance is the only insurance that covers from the time that it is purchase “Back” through the chain of title. Title Insurance looks back at the records to avoid risk from the past to ensure the buyer has complete ownership and minimal risk from outlying encumbrances. It also is one of the few types of insurance that has just a onetime fee.
A title search is a search through all public records to determine whether there are any defects or clouds on the title in a particular County. There are two basic types of searches that are normally used for residential real estate. The difference between the two types is the length of time that they go back. A current owner search is a simple search that identifies the current owner of the property and also looks for any lien that may attached to the property, since the owners acquired the property. Current owner searches are primarily use for refinancing. On a refinance, the new Bank wants to insure that its new mortgage, which will be recorded at the courthouse after close, will be in first lien position. Meaning if the new bank has to foreclose on you, they will be first in line, a head of any other lien that you may have. For example; if pay off your existing mortgage and get a new mortgage, the bank that you paid off, will need to satisfy it at the courthouse or your new mortgage will be in 2nd lien position, which your new bank does not want to occur.
The second type of search is called a 60 year search. It is very similar to a current owner search but instead it follows the chain of title back through 60 years of deeds at the courthouse. A 60 year search is primarily used for the sale of a home. It is much more costly than a current owner and it takes much long to do. However, it is also much more detailed and not only protects the new Bank but also may protect the buyer should anything arise from the past.
In Real Estate, strange things happen! Call Highland Closing Company and protect yourself.
Title Insurance is the Best Proof of Title
The best proof of title ownership isn’t the actual deed to a piece of property, but a solid title insurance policy issued through a reputable title insurance company. I title policy does not guarantee ownership but it provides indemnity if a mistake was made. A few years back I remember a situation in Ohio, were they were weakening the title insurance structure in the state, as if it wasn’t really necessary, a developer built a huge residential planned community and sold all or most of the parcels before finding out later that the original master plot was not research properly an all of the subdivision land never belonged to him. So he built this huge development and sold it off to hundreds of people, and lost it all. It is enough to make a person sick thinking about it. Attitudes toward the value of title insurance, in Ohio, went back to what they were before this happened.
In a word, No. Many people believe that a deed is the end all document as far as owning property goes. A “deed” is just an instrument whereby a seller transfers his or her right of ownership, whatever it may be, to another individual or group. It is recorded at the County courthouse but it only provides the names of the individuals involved in the transaction. Think of how many John Smith’s live in Oregon or Jose Cruz’s in California. There are no ID’s or social security numbers on a Deed, so ownership is up for debate. A Deed is not proof that the person described as the seller is actually the owner. It does not do away with claims or rights others may have in the property. From the deed, you cannot determine what rights, liens or claims may be outstanding against your title. This is why purchasing property with cash and no title insurance is a scary proposition. Lien on property, stay with the property until they are satisfied or extinguished. If you buy a house that has a mortgage on it to a previous owner and it is not satisfied, that bank, that has the mortgage could foreclose and take it from you. On a smaller scale, if an owner sells you house that has a huge sewer bill or back taxes, you will get stuck with them, if not taken care of at closing. Please call us at Highland Closing before you lay out money for a cash deal.
Most Banks and Lending Institutions that lends money on real estate want that investment protected, simply in case the Bank would ever have to foreclose, to get their investment back, should the borrower ever default on the payments. This is accomplished by Highland Closing Company, LLC by providing mortgage title insurance policies to assure the Bank that its mortgage is in a valid first lien position at the Courthouse protecting them against another lien jumping their position at the recorders office. A Lender’s policy affords the lender can be certain about the title which may be acquired in the event of a foreclosure.
An Owner’s title policy protects the buyer of a property. Should there be a title defect that is missed or unknown by the Insurance Company, the buyer is protected. Like mentioned earlier, it is a onetime fee and protects you from the time it is purchased back in time. So, if the property incorrectly changed hands 20 years ago, and you or your heirs become aware of it 10 years from now, you might have a claim to fix the problem. Owner’s insurance is a little more costly than lender insurance, but it provides much more protection for the owner of the property.
