What Is Title Insurance

Security for your Purchase

The purchase of your home or other real estate is likely one of the most important investments you will ever make. When you make such an investment, you want the assurance that the property you are buying will be yours and that no one else can have any claims or restrictions on the possession or use of your property. Title insurance is an insurance policy issued by an underwriter to protect you and your lender against the loss of your right to possess or use your property.

Title insurance is issued after a careful examination of the public records. But even the most thorough search cannot absolutely assure that no title faults are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search. Title insurance eliminates any risks and losses caused by faults in title from an event that occurred before you owned the property.

Who is Responsible for Providing Title Insurance?

The Seller of the property is responsible for providing the Buyer and/or their Lender with proof that the property is free of title defects. The title insurance policy from the Seller provides the Buyer and/or their Lender with a guarantee that the Seller has clear title to the property, not encumbered by any legal attachments that might limit or jeopardize ownership. A title insurance policy from a Seller will help reassure the Buyer and/or the Lender that they are protected from any risks or losses and could help in the sale of the property. Typically, the Seller is responsible for paying the cost of the owner’s title insurance for the Buyer.

Types of Title Insurance

Lender's Policy

A lender's policy, also known as a loan policy or a mortgage policy, protects the Buyer’s lender against loss due to unknown title defects. It also protects the lender's interest from certain matters that may exist, but may not be known at the time of the sale. This policy only protects the lender's interest. It does not protect the Buyer. That is why a real estate Buyer should have an owner's policy.

Owner's Policy

Like a lender’s policy, an owner’s policy protects against loss due to unknown title defects or from certain matters that may exist, but may not be known at the time of the sale. However, unlike a lender’s policy, an owner's policy protects the Buyer against these potential losses. An owner’s policy allows a Buyer to protect the equity in their new home.

An owner’s policy will protect a Buyer from financial loss due to demands that may be charged against the title to their home, up to the cost of the title policy; payment of legal costs if the title insurer has to defend the title against a covered claim; and payment of successful claims against the title to the home covered by the policy, up to the cost of the policy.

Why a Buyer Needs Title Insurance?

Without title insurance, a Buyer may not be fully protected against errors in public records, hidden defects not disclosed by the public records, or mistakes in examination of the title. As a result, a Buyer may be held fully accountable for any prior liens, judgments or claims brought against their new property. If this should occur, the Buyer’s title policy insures that they will be defended at no cost against all covered claims up to the amount of the policy.

What does Title Insurance Protect From?

• Undisclosed heirs
• Forged deeds, mortgages, wills, releases and other documents
• False impersonation of the true land owner
• Deeds by minors
• Documents executed by a revoked or expired Power of Attorney
• False affidavits of death or heirship
• Probate matters
• Fraud
• Deeds and wills by persons of unsound mind
• Conveyances by undisclosed divorced spouses
• Rights of divorced parties
• Deeds by persons falsely representing their marital status
• Adverse possession
• Defective acknowledgements due to improper or expired notarization
• Forfeitures of real property due to criminal acts
• Mistakes and omissions resulting in improper abstracting
• Errors in tax records

How Much Does Title Insurance Cost?

The cost of title insurance is based on a rate per thousand dollars of coverage, plus a charge for the title search and examination performed by the title company. The owner’s policy is typically issued in an amount equal to the purchase price of the property. The cost of title insurance can be discounted if the Seller has an existing title insurance policy that previously insured the property. The policy must be made available to us in order to take advantage of the discount. Also, unlike other insurance premiums, which must be paid annually, a title insurance premium is paid one time only, usually at closing.

How Long Does My Coverage Last?

For as long as you or your heirs retain an interest in the property and, in some cases, even beyond.

Where Can I Get Title Insurance?

Northwestern Title, Inc. has been providing Sellers, Buyers and Lenders with title insurance in Northwest Illinois for over twenty years. Northwestern Title, Inc. uses title insurance underwriters with the expertise and experience, as well as the financial strength, to protect you should a claim arise. Contact us to provide you with the title insurance you need and deserve.