 | Jeff Otto is Branch Manager of Lawyers Title Insurance Corporation which is a member of LandAmerica Financial Group, Inc., a premier national provider of title insurance and settlement services. Lawyers Title has been in the local marketplace since 1955. Jeff has been with Lawyers Title for 34 years, the last 24 right here in Wichita. You may contact Jeff at (316) 682-9600 x 201 or by e-mail at jotto@landam.com |
Real Estate
2004-02-01 15:10:00
Why is there title insurance?
ANSWER: In answer to your question, here is an excellent overview of the title insurance business that I recently researched from the Internet. A title is the foundation of real property ownership. Title to real property gives the owners the right to possess and to use the property. A title search is a detailed examination of the historical records concerning a property. These records include deeds, court records, property and name indexes, and many other documents. The purpose of the search is to verify the sellers' right to transfer ownership, and to discover any claims, defects and other rights or burdens on the property. A title search can show a number of title defects and liens, as well as other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgments against the seller and restrictions limiting the use of the land. Title insurance is your policy of protection against loss if any of these problems…even a "hidden hazard"…results in a claim against your ownership.Title Insurance Companies are the people who do the research, among other things, which provides the evidence of title in a real property transfer or exchange. They provide a title commitment, and a title policy, which insures the involved parties clear title. The research will detect and disclose any item of a defect nature in the title to the property that is discoverable, as well as in the previous chain of title.Closing agents' work for Title Companies and it is their job to follow the instructions of the lender, realtor, attorney, or buy-sell agreement to complete the sale or purchase of the property. Information is gathered from many informational sources to create the final Settlement Statement, or HUD-1, as it is sometimes referred to. This information can include payoff information, tax information, deed and document preparation, and the commission amounts. At the closing, the closing officer explains all of the documents to the parties, and answers any questions they may have. During this process, the Buyer and Seller, or any other party with a legal interest to the transaction will sign the necessary paperwork, which will then be notarized. Then the documents are recorded in the County record, and this process changes the title to the new owner. Generally, the title insurance company will require the Buyer to bring Certified Funds to the closing for the required monies to close the transaction, and then the Title Company will disburse the proceeds from the sale as agreed in the Contract for Purchase and Sale. Unlike abstracts, which involve the "opinions" of attorneys hired by the buyer and the seller as to whether the Seller owned and could convey merchantable title, the title insurance policy is a written insurance policy with recourse for mistakes. Title Insurance does not rely on "opinions", which have proven to be wrong on occasion.
