Property Title Insurance

Stay Protected From Potential Claims to Your Title

Purchasing real property is probably one of the most important and expensive purchases you'll ever make. That's why you should know before you buy, that the sellers are actually the sole owners of the property and that your title, or ownership of the property, will not be subject to claims associated with the actions of your sellers, or other past owners. 

Issues like unpaid taxes, mortgages, mechanic's liens, judgments, court actions, or the existence of another co-owner not joining in your deed can threaten or even invalidate your title and your investment in the property. Call the staff at The Law Office Of Kevin G. Caslin to learn more!

The Title Search and Hidden Risks

A Title Search, which is also known as an Abstract of Title, shows the history of the property as it appears in the public record, as the property passes from owner to owner, together with any other documents recorded or filed in the public record affecting this property. A typical Abstract of Title will track the history of the property back to at least 40 years. The Abstract of Title is helpful in providing most of the relevant information to determine the seller's right and ability to sell the property, and any liens and other encumbrances, but is deficient in providing the full protection a buyer needs in two respects.

First, the Title Search can possibly contain errors or the public record upon which the Title Search is based may have errors. In addition, your ownership of real property may be subject to hidden risks which a Title Search may not reveal. Examples of such hidden risks are forged documents affecting the title, the impersonation of the true owner at a prior closing, instruments executed by someone without the capacity to execute such an instrument such as minors, incompetents, or documents executed under an expired or revoked power of attorney, or claims resulting from decedent's estates if heirs are not afforded the proper notice of the estate proceedings. Even the most diligent Title Search will not uncover these defects.

The second deficiency in regards to the Title Search is that it affords no protection to a buyer should the title prove to be a "bad" or unmarketable title for any reason. If the title proves to be unmarketable, the company providing the Title Search is under no obligation to compensate the property owner or take any steps to correct a title deficiency.

The Role of Title Insurance

If your ownership of a property is challenged for any reason, even based on any of the above listed hidden risks, a title insurance company will defend your title at no cost to you, pay all legal fees, and pay the cost of settling any legal claim. The title insurance company is obligated to pay all legal fees, including lawyer fees, even if the claim brought against you is without merit, and the case is ultimately decided in your favor. If a legitimate challenge to your title is identified, and your title is proven unmarketable, the title insurance company will have the obligation to pay the lien, settle the claim and in the unlikely event of a complete failure of title, pay you your equity in the property. It is for these reasons that title insurance is recommended by us over a title search.

Owner's Title Insurance vs. Mortgagee Title Insurance

There are two kinds of title insurance. Mortgagee title insurance is title insurance that covers an entity (bank, mortgage company, or individual) who has a mortgage on the property, and this title insurance ensures that their lien is a first lien. Most banks and mortgage companies require that a purchaser obtaining a mortgage buy mortgagee title insurance. This policy alone offers no protection to the owner of a property. Such protection is only available if an owner's title insurance policy is bought. In New York State, title insurance companies make it possible for you to buy owner's title insurance on the day of your closing, for a reduced fee called a simultaneous rate. Unlike other forms of insurance, you pay for an owner's title insurance policy with one low-cost premium. Although it is not paid yearly, the lone payment covers you for as long as you own the property. Please also note that title insurance premiums are set by the New York State Department of Insurance and because of that, they are the same throughout the state for every company. For an additional small fee, you may also be able to buy a "market value rider," which increases your coverage for any increase in the market value of your home.

The decision to purchase owner's title insurance is an important one and should be discussed with an attorney. Doing so ensures that a buyer of real estate is able to make the most informed decision possible.