Traditionally, title insurance has covered matters that happened in the past. Protection against matters that you cannot discover by examining the public records is the most important benefit of title insurance. These include slight surveying errors, judgments against persons with similar names or incomplete notary acknowledgments. The insurance company may choose to insure against loss or damage due to known defects. Title insurance is ordered by the settlement agent so you don’t need to call around looking for it. The title insurance binder and the policies issued after settlement represent an insurance company’s obligation to protect the insured’s interest in the property. Other companies may rely on title agents rather than attorneys.Ī title insurance binder, prepared based on information found in the abstract, commits a title insurance company to insure the transaction.
In our office, an attorney reviews the abstract or summary prepared by the title examiner to determine the legal impact of the various documents. The settlement agent will order a careful search of the public records to identify documents bearing on the title in question. The seller must correct title defects such as unreleased mortgages or judgments, unpaid taxes, and sewer and water liens. The seller must give you marketable title, title that is of such quality as to ensure its ready acceptance by a future purchaser or lender.
They will not entitle the purchaser to cancel the transaction. Usually these matters are not considered defects but a part of modern life. Property is often subject to restrictive covenants limiting use of the property, or easements for utilities and other public purposes.
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