Frequently Asked Questions about Title Insurance…
What is a title examination, or title search?
Title examination is the most important phase of a real estate transaction. The examination determines whether the title is marketable. It informs the Purchaser and the Lender if the property being conveyed is free and clear of any liens, encumbrances or judgments that may have arisen during prior ownership. It’s a close examination of all public records that involve title (deed) to a piece of real estate. The person conducting the search looks at past deeds, wills, and trusts to make sure the title has passed correctly to each new owner. The examiner tries to verify that all prior mortgages, judgments, and other liens have been paid in full.
What are “clouds” on a title?
Any document, claim, unreleased lien or encumbrance that might invalidate or impair the title to real property or make the title doubtful. Clouds on title are usually discovered during a title search. Clouds on title are resolved through initiating a quitclaim deed or a commencement of action to quiet title. A “defect” or “cloud” on the title is a problem that makes ownership questionable. For example, a previous owner sold the property 10 years ago. Her husband was listed on the deed but for some reason did not sign-off at closing. His interest in the property is a “cloud” and must be removed to clear the title.
If the title looks good why do I need title insurance?
Because remember we are all human and make mistakes. The examination covers all aspects of ownership during the years prior to your closing. Even an expert title examiner can miss a defect that might crop up to create problems for you later. A title search is done by examining public records to look up the history of property ownership. It shows not only limitations on the use of the property and rights others may have in the property, but also liens or monetary obligations that are outstanding against the property.
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Posted on July 13, 2012, in Title and tagged Buy a Home, Buyer, Closing, Closing Costs, Cloud, Deed, Defective Title, Encumbrances, Fort Myers, Jennifer Ferri, Judgment, Lender, Lien, Mortgage, Property Guiding, SWFL Real Estate, Title Examination, Title Insurance, Title Junction, Title Search, Title Work, Trust, Will. Bookmark the permalink. 2 Comments.