One of the important roles of a title company is to provide an insurance product that guarantees that the buyer is acquiring it without anyone else having a claim to the property. As a part of this process, the company searches the history of a property’s title to find every claim against it. These are searches that happen via public records.
The title company issues a preliminary title report to find out what needs to be paid off so that the buyer gets clear title and the seller walks away from the property without any obligations. Title insurance protects the interest of property owners and lenders against false title claims by previous owners or lien holders. The facts uncovered during the initial search will determine a number of items:
A. The seller, is in fact, the legal owner of the property.
B. That the ownership being sold is currently and accurately vested with the seller.
C. The presence of any unsatisfied liens (loans, mechanic liens, child support liens, etc.) which must be satisfied before “clear title” can be conveyed.
D. Existing restrictions, easements, rights of way or other rights granted to others are not owners which may limit the right of ownership.
E. The status of property taxes and other public or private assessments.
Title insurance is a onetime premium based on the amount of the sale or mortgage and remains in effect as long as the owner or their heirs retain interest in the property. If a claim is made against the owner the insurance company protects the insured by:
A. Defending the title, in court if necessary at no cost
B. Bearing the cost of settling the case, if it proves valid in order to protect your title and maintain possession of the property.
Title insurance provides the homebuyer (and new homeowner) with peace of mind. It’s a good idea to have it.
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