Title Insurance

When a title company receives an application for title insurance, their initial area of responsibility is to abstract the public land records in order to examine information surrounding the title to the property being purchased. This title investigation or search is referred to as the "Chain of Title". The "Chain of Title" will reveal the following:

That the contract seller of the property is, in fact, the legal owner and that all owners are parties to the contract.

That the estate or degree of title which you have agreed to purchase is currently and accurately vested in the seller.

The presence of open mortgages judgments or similar liens which must be satisfied before a clear title can be conveyed to you.

Existing restrictions, easements, or rights of way for roads, public utilities, etc., which may limit your right to the use of the property, or grant rights to others who are not owners.

The status of property taxes and other public or private assessments.

Once this investigation or title search is complete, the information is supplied to you and your lender in the form of a commitment for title insurance.

During the final settlement or closing stage of your purchase, the title company will work very closely with your lender. Acting in its fiduciary capacity, the title company will handle the transfer of all appropriate funds between buyer, seller, tender and all other interested parties. After closing the Owner's Title Insurance Policy is issued and will protect you against hidden title defects such as fraud, forgery, incompetence or similar matters which are not revealed by the public records.

The real estate contract most frequently used in this area calls for the home seller to provide you with marketable title. This means among other things that you should be provided with an Owner's Title Insurance Policy at the seller's expense. You, as buyer, will pay a lender's mortgage policy and required endorsements.

This article is designed to give a general overview of the role of the title company in real estate transactions. It does not attempt to answer all questions which could arise, as such questions are unique to each transaction, but it is presented in the hope of educating the home buying public as to the intricate role played by the title company.