So, you’re buying a house. It’s an exciting time. It can also be a bit confusing. Things feel like they’re happening pretty fast and, often, some important things can go unexplained – like title insurance. Many people don’t understand exactly what title insurance is or what it does, even a lot of people that already have it. As a title insurance company, Stewart Title would like to remedy that. So we’ve put together some basic information for you on title insurance in this email.

What is title?

Simply stated, the title to a piece of property is the evidence that the owner is in lawful possession of that property.

What is title insurance?

Title insurance protects real estate owners and lenders against any property loss or damage they might experience because of liens, encumbrances or the defects in the title to the property. Each title insurance policy is subject to specific terms, conditions and exclusions.

How does title insurance differ from other insurance?

Insurance such as car, life, health, etc. protects against potential future events and is paid for with monthly or annual premiums. A title policy insures against events that occurred in the past of the real property and the people who owned it, for a one-time premium paid at the close of the escrow.

What does it cover?

Title insurance protects against claims from defects. Defects are things such as another person claiming an ownership interest, improperly recorded documents, fraud, forgery, liens, encroachments, easements and other items that are specified in the actual policy.

Who needs it?

Purchasers and lenders need title insurance in order to be insured against various possible title defects. The buyer, seller and lender all benefit from the issuance of title insurance.

How is a title policy created?

After the escrow officer or lender opens the title order, Stewart Title begins a title search. A Preliminary Report is issued to the customer for review and approval. All closing documents are recorded upon escrow’s instruction. When recording has been confirmed, demands are paid, funds are disbursed, and the actual title policy is created.

What is escrow?

Escrow refers to the process in which the funds of a transaction (such as the sale of a house) are held by a third party, often the title company or an attorney in the case of real estate, pending the fulfillment of the transaction.

What are the policy types?

A standard policy insures the new owner/homebuyer, and a lender’s policy insures the priority of the lender’s security interest.

Contact us for information about title insurance and to learn more about our company.

Potential buyers usually decide within minutes whether or not a home is right for them. As you prepare your home to go on the market, try to view it through the eyes of a buyer. We have provided some tips below to assist you in preparing to sell your home.

Tips For Selling Your Home:

General

A fresh coat of paint is fast, easy and affordable – consider repainting the kitchen, bathrooms, bedrooms and other areas
Use a neutral color scheme when making any decorating choices
Neatness makes a home look bigger; avoid clutter
Avoid too many personal items, such as family photos
Cleanliness counts
Make sure all closets and shelving units are straightened

Kitchen

Make sure it is bright and attractive
Consider new window treatments
If the flooring is badly worn, replace it
Replace any loose or cracked tiles on counters and walls
Avoid leaving dirty dishes in the kitchen sink or on the counters
Clean and uncluttered counters add a sense of spaciousness
Remove any appliances or decorative items from counters

Bathroom

Repair any dripping faucets
Always hang fresh, clean towels in the bathrooms
Remove any stains from toilets, sinks, bathtubs and showers
Clean this room every morning
Updating old fixtures can make a big difference
Unclog sinks, bathtubs or showers that drain slowly

Living Areas/Bedrooms

Make sure wall surfaces are in good shape – repair all cracks and nail holes
Make sure the windows are in good condition; replace cracked or broken glass/torn screens and wash the windows
Also, make sure windows open and close smoothly
Check ceilings for leak stains
Replace faded curtains or bedspreads
If you have a fireplace, clean it out and put in fresh logs
Replace burned-out light bulbs and make sure light switches work
Clean floors and vacuum rugs and carpeting
Fix any doors or sliding glass doors that stick
Keep toys inside children’s rooms in orderly fashion

Garage

Clean out your garage
Dispose of anything you are not going to move
Make sure the garage door opener is in good working condition

Outside

Make sure the front door and entry area are clean
Repaint the front door if necessary
Keep the lawn and shrubs trimmed and neat looking
The proper landscaping can add an attractive and inviting touch
Sweep walkways and driveways
Consider painting or touching up your house
Check the roof and gutters

Contact us for more information on the home selling process and to learn more about our company.

Other types of insurance coverage focus on possible future events and charge an annual premium – such as flood insurance or hazard insurance that safeguard against loss from wind damage. Title insurance protects against loss from hazards and defects already existing in the title and is purchased with a one-time premium.

Title search and examination is the first step.

Insuring a home’s title begins with a search of public land records affecting the property. The title agent or attorney working on behalf of the underwriter examines pertinent documents to determine whether the property is insurable. Those documents include deeds, wills, trusts, outstanding mortgages and judgments, property liens, highway or utility line easements, pending legal actions and notary acknowledgements.

When title problems are disclosed during the search process, they are corrected whenever possible to avoid future claims. According to surveys done by the American Land Title Association (ALTA), title problems consistently arise in one out of three real estate transactions (36%).

A corrective process is vital to curing 
title problems.

The process of performing title searches and curing title problems does not come cheap. Industry studies find that title insurers spend an average of 92 cents out of every premium dollar as their cost of doing business.

The most common actions to cure title defects include:
Releases/pay-offs for liens – 33%
Releases/pay-offs for deeds/mortgages – 19%
Typographical corrections (names, addresses, 
legal descriptions) – 17%
Clearing estate/family issues – 11%
Clearing physical property issues – 7%

What if a problem is hidden or missed?

After all this searching and examination, a title problem may still be hidden or missed, such as:
A forged signature on a deed
An unknown heir who steps forward to claim ownership of the property
An expired or forged power of attorney used during a property transfer
An incorrect public record

In each of these cases and many more, when there is appropriate title insurance coverage, a policy will offer financial protection. The title insurer defends the title and either perfects the title or pays valid claims.

Why do lenders need it?

Lenders require the homeowner to purchase title insurance, just as they call for fire insurance and other types of coverage to protect their financial investment in the property. A lender’s policy insures that the mortgage is valid and the lien priority is correct. In addition, title insurance is required for lenders who package and sell their loans in the secondary mortgage market.

For the homeowner to be covered, he or she must purchase an owner’s policy in addition to the required lender or mortgagee policy.

A separate owner’s policy is the best policy.

Owner’s title insurance lasts as long as the policyholder or his or her heirs have an interest in the property – maybe even after the homeowner has sold the property. It is either purchased for an additional premium or an owner may pay a simultaneous issue charge (usually a smaller amount) for the separate lender coverage.

Why title insurance?

Title insurance was first issued in 1871 to enable speed and efficiency when property is conveyed, or legally transferred from one owner to another. Because of title insurance, real estate is more marketable and thus more valuable. It has worked so well to protect buyers and lenders against defects in legal ownership that it is spreading around the world, with Stewart Title as a primary stimulus of that global growth.

Therefore, while the title industry in many states closes the transaction, handles the escrow and records the documents, it also works to make the title searches even faster, better and more cost effective. The role of title insurance to fix problems and pay claims is crucial to the marketability of real estate.

Contact us for more information on title insurance and to find out why Stewart is the right title company for you.