Finding Peace of Mind In Title Insurance

Indemnity insurance is protection against financial loss arising from problems connected to the real estate title of a property. By purchasing a title insurance policy, the client is gaining important knowledge that recorded instruments have been searched and scrutinized so that title insurance covering the property can be issued. This awareness will give all parties involved in a real estate transaction peace of mind. Another benefit to title insurance is for defending against claims that are not revealed in the title search and are made after the property is purchased. 

What Does Having A Clear Real Estate Title Mean?

Having clear real estate title to the land means that there are no claims against it. For example, a person not involved in the transaction might claim they have a deed or lease giving them ownership or the right to possess the property, another person might claim they hold an easement giving them a right to access across the property, and someone else might have a lien on the property securing it as a repayment of a debt. All of these issues could make the property unmarketable.

To establish a clear real estate title, a title insurance company will do a search that begins with the current individual holding the real estate title and move backwards until the original U.S. patent that established the deed is located. Not only does this create a chain-of-title on the property, but it also discloses other issues such as grants of easement, and liens made against the property.

Is Purchasing Title Insurance Mandatory?

If you need to borrow the funds, then yes, all lenders require title insurance for an amount equal to the loan. You might ask why and the answer lies in the way financial institutions operate. Mortgage loans in Cape Coral, Fort Myers, or anywhere in Florida are generally made by persons acting in a fiduciary capacity, which means that they are or could be lending money that belongs to someone else. To safeguard this investment, the lender asks for title insurance against the loss of security as a result of a real estate title problem. Even if you pay cash, you will want to have your investment protected.

Not only does the lender benefit from title insurance, so too do the purchaser and the seller of the property. The purchaser will gain protection against serious financial loss due to a defect in the property's title. Title insurance protects against claims arising out of title problems that could have been discovered in the public records and non-recorded deficiencies that could not be discovered even with the most complete search. For the seller, a title insurance policy assures that the title is marketable.

There is another benefit to indemnity insurance; while the probability of exercising a right to make a claim is extremely low, anyone can make a claim on the property, whether it is valid or not, and the legal defense provided by the title insurance policy alone will greatly exceed the one-time premium. Title insurance is a win, win situation for all involved parties.

Real estate title insurance can be confusing, but working with a reputable company like Title Junction can help. Whether you're in Cape Coral, Fort Myers or around Florida, please give us a call and see if we can help.