Title Insurance Protects You Against “Clouds” on Your TitleFebruary 28, 2020
You’ve signed the Agreement to purchase the home of your dreams. Congrats! You are your representative will contact us, the Title Insurance Company, to perform a land records search, prepare a title report and ultimately issue a Title Insurance Policy insuring the stakeholders against “clouds” on the property title. What is the title agent referring to when they make the statement – “cloud” on title? It’s a common problem that in some way denotes throughout the ownership history of the property, there may be a break in the chain of title or irregularity in the historical ownership. But when you select a competent Title Insurance Company and purchase the requisite insurance, you are protected against those situations, even if it wasn’t possible to know about them at the time you purchased the property.
The most common cloud on title is a missing person from the chain of ownership. For instance, if John Doe and Mary Jones bought the property in 1985 but only John Doe sold it in 1989, we must question what happened to Mary. Or perhaps a former owner died, and his estate sold the property. Our Title Insurance Company will review the filed Estate papers to make certain that anyone who was to sign off did, in fact, sign off.
Other possible clouds on title could result from the following:
- Execution of documents by someone not of sound mind
- Documents executed by someone under the age of majority
- Powers of Attorney used after the principal was deceased
- Unpaid taxes on an estate or transfer
So, what happens when Mary Jones appears at your door claiming she owns the property? Fortunately, you acquired Title Insurance so instead of you having to spend the time and money to investigate and defend your rights, the Title Insurance Company will indemnify and defend you. Title Insurance will protect you from financial loss from claims made against the title or losses incurred should the claim be successful. Basically, your Title Insurance Policy will protect you against the costs of fighting a claim (legal defense costs) which could potentially be far greater than the value of the property you purchased.
Last, remember that if you acquire a mortgage when purchasing that new beautiful home , the bank is going to require a Lenders Title Insurance Policy even if you’ve purchased an Owners Title Insurance Policy. The lenders policy protects the bank’s interest in the real estate, but your Owners Policy issued by our Title Company will protect you against clouds on title as discussed above.
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