Protecting Your Home Investment
A home is usually the largest single investment any of us will ever make. When you purchase a home, you will purchase several types of insurance coverage to protect your home and personal property. Homeowner’s insurance protects against loss from fire, theft, or wind damage. Flood insurance protects against rising water. And a unique coverage known as title insurance protects against hidden title hazards that may threaten your financial investment in your home.
Imagine your family has just settled into your new home. What would happen if you were notified that the seller did not have the right to sell you that home, and the true owner has come to reclaim his property? Or, you are just about to build your dream vacation home on a beautiful acreage. What would you do if a utility company approached you to pave a road right through the center of your land, citing a legal easement attached to the title of your property?
You see, when purchasing a home, instead of purchasing the actual building or land, you are really purchasing the title to the property – the right to occupy and use the space. That title may be limited by rights and claims asserted by others, which may limit your use and enjoyment of the property and even bring financial loss. Title insurance through Pennington Title protects against these and other types of title hazards.
Two Kinds of Title Insurance
Owner’s title insurance assures you, the owner, that the title to the property is properly vested in you and that it is free from defects, liens, and encumbrances (except those listed as exceptions in the policy). Owner’s title insurance lasts for as long as you, the policyholder – or your heirs – have an interest in the insured property. This may even be after you have sold the property.
Most lenders require mortgagee title insurance as security for their investment in real estate, just as they will call for homeowner’s insurance or other types of coverage as investor protection. When lender’s title insurance is provided by us, lenders are willing to make mortgage money available in distant locales where they know little about the market.
In Pennington County, it is usual and customary that the seller purchases the Owner’s Policy, and the buyer purchases the Lender’s Policy. For a quick estimate of your title insurance rate, see a table of our rates (fees for additional services may apply).
What Does Your Premium Really Pay for?
Other types of insurance that protect your home focus on possible future events and charge an annual premium. Title insurance protects against loss from hazards and defects that already exist in the title and is purchased with a one-time premium. In this way, title insurance focuses on risk elimination before insuring. It gives you, the policy holder, the best possible opportunity for avoiding title claim and loss.
At Pennington Title, the title insurance process begins with a search of public land records affecting the real estate. Our licensed examiners conduct an examination on behalf of our underwriters to determine whether the property is insurable. The examination of evidence from a search is intended to fully report all “material objections” to the title. Frequently, documents that don’t clearly transfer title are found in the “chain,” or history that is assembled from the records in a search. Here are some examples of documents that can present concerns:
- Deeds, wills and trusts that contain improper wording or incorrect names
- Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes
- Easements that allow construction of a road or utility line
- Pending legal action against the property that could affect a purchaser
- Incorrect notary acknowledgements.
(For a broader description of several common title problems, see our FAQ’s page.) Through the search and the examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful preventative work cannot locate all hidden title hazards.
Hidden Title Hazards – Your Last Defense
Despite all the expertise and dedication that go into a title search and examination, hidden hazards can emerge after closing, resulting in unpleasant and costly surprises. Some examples of hidden hazards include:
- A forged signature on the deed, which would mean no transfer of ownership to you
- An unknown heir of a previous owner who is claiming ownership of the property
- Instruments executed under an expired or a fabricated Power of Attorney
- Mistakes in the public records.
A title insurance policy offers financial protection against these and other covered title hazards. We will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims, all for a one-time premium paid at closing.
Your home is your most important investment. Before you go to closing, ask about your title insurance protection, and be sure to protect your home with an owner’s title insurance policy from Pennington Title Company.
(Information on this page courtesy of Stewart Title Guaranty Company.)