Title insurance is an essential element of any home purchase whether cash or lender financed. Title insurance helps protect your investment in your home. For a one-time fee, title insurance assures clear ownership of title for the homeowner and then provides insurance protection for as long as you own your property. The title insurance policy for the owner (termed an Owner’s Policy) is typically issued in the amount of the real estate purchase price. Who pays for title insurance is a matter of local custom. In Pennsylvania, the buyer purchases title insurance for the property he is purchasing. It is estimated that closing companies like Settlements, Ltd. discover and cure errors in one out of every three real estate transactions before the buyer ever gets to closing. It ensures that the property you purchase becomes yours free and clear of any past title problems or issues. By protecting your investment with title insurance, you are guarding against claims, restrictions on land use or loss of your property. Dating back years, plenty of opportunity exists for a defect to appear on your property’s title, including but not limited to tax liens, forged deeds, open mortgages, common errors in the public records and mistakes made when examining the title, deed challenged as being given under fraud or duress, foreclosure deeds where the appropriate procedures were not followed, deed signed utilizing an invalid power of attorney, misinterpretation of a will, missing heirs not accounted for, errors in tax records, discovery of a later will after probate of first will, deed to land without a right of access to a public street or road, right of access wiped out by foreclosure on neighboring land. When you purchase title insurance, we thoroughly examine the title to the property, thoroughly examine all the public records and clear up outstanding title issues, thus providing you with clear ownership of your new property. We refuse to close on a property with potential title problems – it is really that simple.
Without title insurance, you could be held responsible for someone else’s mortgage, unpaid back taxes, satisfaction of other liens or be forced to defend your title against third party claimants. Title insurance is a one-time charge at the time of purchase.
For all of these reasons, Settlements, Ltd. refuses to close without the purchase of title insurance.
The following are two excerpts from First American’s claims chronicles which underscores the value of title insurance:
Owner became involved in a dispute with the United States government. Owner bought his home from someone who had acquired it from the IRS at an auction after it had been seized by the IRS in connection with unsatisfied tax liens. After moving in, Owner was shocked to learn that the IRS had rescinded the original sale and returned the first Buyer’s money. The IRS refused to issue a deed, meaning the right, title and interest in the property was not transferred to the original bidder or in turn, to Owner. Even worse, tax liens totaling millions of dollars were placed on the house. Owner contacted First American which went to bat for the Owner, representing them in court and winning. More than $45,000.00 in attorney and settlement fees later, Owner received ownership to his home without spending any of his own money – all thanks to the protection of title insurance.
In another scenario, Owner wanted to remodel a triplex that he owned. He discovered that a strip of land had somehow become detached from the legal description of his property. This strip included valuable off-street parking. Owner had been paying taxes on the entire property and tax records dating back more than 40 years included the strip as part of the property. In order to obtain the permits so that he could make the necessary repairs, Owner had to prove that this piece of land belonged to him. When First American was contacted, they agreed that the strip of land in question was included and described in Owner’s title insurance policy. First American appointed counsel for Owner, filed suit, argued Owner’s rights and was able to obtain a title decree allowing him to retain title to the strip of land.