Title Insurance FAQs
Discover the answers to our most Frequently Asked Questions about Title Insurance and More.
What is a title search? Why do I need one?
A title search is a detailed examination of all public records that affect a specific real estate property. These records may include property and name indices, mortgages, tax records, and deeds among other documents. The purpose of the title search is to verify the seller’s true interest in the title, the legal right to sell the property and to discover any claims, defects and other burdens on the property. The search protects everyone involved in the property transaction since problems with real estate are transferred with ownership.
What kinds of problems can a title search reveal?
An initial title search can reveal any party that might have an interest in the property, as well as a number of title defects, liens or other restrictions. For example, things like outstanding taxes, unsatisfied mortgages, and judgments against any recent owner, as well as restrictions on the use of the land, may require an extensive search.
Are there problems that a title search cannot reveal?
There are several hidden problems that are impossible for a search to uncover. For example, a previous owner may have recorded his marital status incorrectly, resulting in a possible claim by a legal spouse. Other hidden problems include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names, and clerical errors in the records. These defects can arise several years after the purchase of your home and can jeopardize your right to ownership.
What is title insurance? Why do I need it?
Title insurance is a policy that protects you against loss if any of the above problems result in a claim against your ownership. In Illinois, it is required that the seller provide protection to the buyer for matters regarding title to the real estate and that the selected Illinois registered title insurance company give this protection. In the event that there is a claim, Baird & Warner Title Services underwritten by Commonwealth Land Title, will defend you against that claim.
What are the different types of title insurance?
There are two basic types of insurance policies – Owners Policy and Mortgage Policy. The Owners Policy is purchased by the seller for the buyer to protect the buyer’s interest in land by giving the buyer insurance that nothing is clouding title. The Mortgage Policy is purchased by the buyer and protects the interest of the lender or mortgagor, and insures that the lender is in first lien position.
Do I need both types of coverage?
Yes, if you have a mortgage you will need both an Owners Policy and a Mortgage Policy. Most lenders require a Mortgage Policy for almost all mortgages, but this policy offers no protection to the landowner. Many claims propose no threat to the lender but could cause great loss to the owner. An Owner’s Policy protects the owner from the threat of loss and would be needed with or without a mortgage.
What is the cost of title insurance?
The cost of title insurance is paid at closing and is a one-time fee based on the cost of the Owners Policy and the Mortgage Policy. How long does title insurance coverage last?The insurance coverage never needs to be renewed. It is valid for as long as you or your heirs have an interest in the property. Note, if you refinance you will need to obtain a new Mortgage Policy as a requirement by the lender.
Who makes the choice of which title company to use?
Historically, attorneys have made the choice of what title company will be used; however, sellers should be made aware that attorneys do receive compensation for placing the title order with the title company with which the attorney may be affiliated. Therefore, because the cost of title insurance is the responsibility of the seller, and it is the seller’s obligation to provide the buyer with clear title while paying a reasonable fee.
What is Endorsement Coverage?
Endorsements are supplements to a Mortgage Insurance Policy that the general policy does not cover. The lender specifies what endorsements are needed to provide added protection to the Mortgage Policy.
- Commonly Used Residential Endorsements
- Location Endorsement
- ARM Endorsement
- EPA Endorsement
- PUD Endorsement