Because your home is probably
the most important investment you will ever make, you want to do all you can to protect it.
One of the ways you can do that is through homeowner's insurance. But
even the most comprehensive homeowner's policy won't help if your right to
ownership and the property itself
is questioned. That's why owner's title insurance should be an essential part of
the home-buying process.
The questions and answers below help explain why protecting the
title to your property is one of the most important aspects of homeownership--one
that will guarantee your right to enjoy the pleasures of your home for as long as
you own the property.
Title insurance protection gives a homeowner peace of mind. When you have a title policy,
you'll never be concerned about the security of your home or the safety of your
The title policy you receive is issued only after a thorough search of the
title by title experts who, because of their proficiency and recognized
accuracy, are approved by title insurance underwriters. It
recites the condition of the title reported by these experts. It defines the coverage afforded, lists
any exceptions there may be and then, in effect, it says, "You will be defended,
without expense to you, against any attack
on the title to your property as insured. You
will be protected against financial
losses caused by these title defects-whether
they crop up months after you buy your home or days or years later."
of that written guarantee stands the title insurance underwriter who is financially strong with a national reputation for integrity, dependability and
safe, sound title insurance protection.
a prospective homeowner you should make sure that your checklist of
homeownership features includes the finest title insurance protection obtainable.
There is no better title insurance
protection than a policy issued by
LandAmerica Lawyers Title and First American Title Insurance Company. The
protection afforded by Title insurance is great - the cost is small. One single, nonrecurring premium
protects you and your heirs for all time.
What is title
Title insurance is the
application of insurance principles
to hazards inherent in real estate titles.
That's a legalistic definition,
we know. But in the century that
title insurance has been used, no one in or out of the title insurance industry
has ever been able to completely define title insurance in short, lay terms. Actually, the definition is the
composite of answers to the following questions.
What is "title"?
"Title" is the
foundation of ownership of property. It
means that you have a legal right to possess that property and to use it within
the restrictions imposed by authorities or limitations on its use-superimposed
on the basic right to possession by previous
Why does buying a home differ from all other purchases?
No other property has a useful
life that compares with the life of land. Owners
die, new ones succeed, but land goes on forever.
Owners of goods may change their locations at will, but land is
immovable. Being both permanent and
immovable, it lends itself to the absorption of innumerable rights. Over the ages, this so impressed lawyers
and jurists that they formed a separate body of laws for land. These laws, creating many types of
rights in land, are so numerous and so complex it is impossible for there to be
a mathematical certainty of ownership.
What are some of the limitations and restrictions commonly imposed on land?
There are many common
encumbrances placed on land. The
most common is a mortgage. As long
as the mortgage or any portion of it is outstanding, only a limited title can be
passed. Other common limitations
are the granting of the right to cross the property with electric and telephone
lines, an underground cable or sewer line.
A family burial plot establishes a sanctified spot for all time. An ordinance may restrict land to
residential use, or it may prohibit construction of a building closer than a specified number of feet from the street line. These are just a few of the many
limitations that are placed on the uses of land.
What is meant by a title defect?
Boiled down, a title defect is
anything in the entire history of ownership of a piece of real estate which may
encumber the owner's right to the "peaceful enjoyment" of the property
or which may cause the owner to lose any portion of the property.
Why should I protect the home I buy with title insurance?
Because without title insurance
you become a self insurer. This is
inadvisable unless you are in a financial position to lose the money you have
invested in your home without upsetting your financial condition in any way.
Is title insurance always used in property transfers?
No. Sometimes an abstract of
title is considered sufficient by the purchaser. Sometimes only a deed (usually a General Warranty Deed) is
required. And in other cases an
attorney will offer an opinion or certificate of title which a purchaser might
accept as sufficient protection.
Why isn't an attorney's
opinion sufficient if he or she has
examined the title?
First, there are many title
defects which even the most astute title examination will not uncover. Then, chance of recovery in the event of
a title loss in this case depends entirely upon the solvency of the attorney
examining the title and the attorney's liability is limited to errors and
oversights that would not be made by a diligent attorney. The attorney is not liable for loss
caused by hidden defects.
Why won't a General Warranty Deed fully protect me?
With a General Warranty Deed the
grantor can pass on to the grantee only such title as he or she holds. It is true that if title fails, the
purchaser may have, under some circumstances, a cause of action against the grantor, but the chance of
recovery is dependent entirely upon the financial ability of the grantor to pay
time that judgment is acquired-often after a long and expensive court action. Title insurance is a corporate guarantee
of a company operating under the rules and regulations of the insurance
commission or other state agency. The
security afforded by any policy is controlled by the integrity and financial
structure of the company issuing the policy.
What's wrong with an abstract?
Nothing-so far as it goes. However, an abstract is simply a
condensed version of the recorded documents affecting title to the property. The limitations on the liability of an
abstracter who issues an abstract are the same as those of an attorney who
issues an opinion of title.
The contract I signed makes the sale subject to title to the property's being good. Doesn't that protect me?
Only superficially. The seller cannot be sure the title is
good. Even a perfect-looking title
can be seriously defective because of hidden defects. Then if anything should happen to defeat your title, your
cause of action would be against the seller.
Your chance of recovery would depend upon your finding and suing the
seller, winning the suit and, finally, on whether or not the seller was able to
pay the judgment. In any event,
your attorney's fees and expenses would be a loss to you.
If the real estate broker says the title is good, isn't that enough?
No. The broker can't be sure,
either, that the title is good. No
The mortgage lender is usually represented by an attorney.
Won't that attorney look out for my interests, too?
Only coincidentally, insofar as
your interests and those of the mortgage lender are the same. When an attorney is retained by the lender, the attorney must look
after the lender's interest in any areas that might conflict with your own. You should have an attorney to represent
After I retain an attorney, can't I be assured that my title is good?
Every attorney knows that there are hazards in real
estate titles which cannot possibly be discovered with even the most diligent
search of the public records. For
instance, the attorney cannot be sure: that the marital rights of all previous
owners have been properly relinquished; that all mortgages, judgments, etc.,
affecting the property have been properly indexed in the record room; that all
signatures on all recorded documents are genuine; that no unknown heir of a
former owner can appear to assert his or her claim. These are but a few of the matters that can crop up to defeat
real estate titles. Among others
are such circumstances as fraud, duress, infancy, insanity, false personations,
An attorney is not liable if you should suffer loss
because of any of the "hidden defects" in a real estate title. Liability extends only to losses caused
by oversights or carelessness in the attorney's work. Then, too, liability is limited by the attorney's ability to
pay, as well as by his or her life span.
When I buy a home and have it financed,
should I still have title insurance
to safeguard my purchase?
By all means. While
the title insurance coverage afforded the lender and owner is somewhat the same,
it is also substantially different in important areas. Because of the diminishing debt of the
mortgage and the increasing equity of the owner in the property as payments are
made, it is apparent that there could be a complete title failure with the
mortgagee suffering no loss because of title insurance coverage and the owner
suffering substantial loss because he or she had no title insurance. In fact, if the owner is not protected
with an owner's policy, it is entirely possible that payments made by the title
insurance company in the process of perfecting title under a mortgagee policy
can be made a lien against the properly second only to the mortgage under which
the mortgage policy was issued. The
lien becomes, in effect, a junior or second mortgage secured by the property and
must be paid off by the owner after the prior liens are paid
or before the property can be sold.
When I buy a home and the deed is recorded in a record room, wouldn't that prove that I own
the home I bought?
No. It is only evidence that you
have taken over whatever rights the grantor had in the property. For instance, if the deed to the grantor
had been forged, then the grantor had no rights to pass on to you. As another example, perhaps the driveway
on your property had been made a joint driveway by giving the next-door neighbor
the right to use it. In that case,
the grantor or seller could not pass sole ownership of the driveway on to you no matter what
the deed says. The recorded deed is
public notice that you have taken over only those rights the seller may have had
in the property.
Is title insurance as important as fire insurance? Yes, because your losses without
insurance can be greater than fire losses. If
a house burns, the land is still there on which tore build. lf title to the
property fails, you have nothing.
That is why owner's title insurance is always written to cover the value
of the house and lot.
Does title insurance protect the safety of my investment and the
security of my home?
Yes, although title insurance
cannot eliminate title defects any more than fire insurance can eliminate fire. However, title insurance (1) assures you
of the best possible legal defense if your title is attacked and (2) reimburses
you up to the face amount of the policy if the title, or any part of it, should
Why don't we see title losses
reported in the newspapers?
First, a title loss is rarely as
spectacular as a fire or hurricane, and a title loss is not so immediate. A claim is made, and then there is
usually a long, involved court action filled with legal technicalities that seem
confusing and, so, uninteresting to the press and its readers. The actual loss, established in the
courts, may take place years after the claim is made against the title.
Probably within your experience
you have known of a title loss-or a title dispute-a fight among heirs over a property or between neighbors
over a boundary line, for example.
Are there several kinds of title insurance?
There certainly are. First there is the owner's policy which
the home purchaser needs for his or her protection. Then, there is the mortgagee's policy which protects only the
institutions lending mortgage money on a wide scale insist upon mortgagee title
policies for their protection. Then there is a leasehold policy used primarily by commercial
and industrial organizations that rent property on long-term leases.
How much does title insurance cost?
Because of local conditions,
varying premium rates are established-sometimes, prescribed by the state agency
responsible for the proper operation of title insurance companies. However, the pure basic premium rate for
owner's title insurance varies within the narrow range of $3.50 to $5.00 per
coverage. In some areas the
"title insurance" rate quoted to the public is a combined charge for
title examination and title insurance. (See next question and answer). Under any circumstances, this premium is
payable only once. There is no
further charge-there is no recurring premium although the policy is effective
for as long as the insured or his or her heirs have any interest whatsoever in
the property and afterwards so long as liability under any warranty of title
Does the title insurance premium cover the fee for searching the title?
No. However, in some areas a
"package rate" is charged which includes the attorney's or
abstracter's search fee and the title insurance premium. The entire "package rate" is
referred to as "title insurance."
It is well to remember that if a
title search fee is not shown as such on your closing statement, the "title
insurance" charge probably will include the search fee plus the title
When I buy a home and protect it with title insurance, what happens in
the event someone should challenge my
ownership of the property five or ten
You notify the title insurance company which, in
accordance with the terms of the policy, undertakes, at its expense, defense of
the title. If the claim reaches the
courts, the title company retains attorneys and bears the expense of defending
the suit. This is true whether your
period of ownership is a day or a generation or more.
insurance protection available in the area
where I plan to buy a home?
Chances are it is.
Lawyers Title insures properties throughout the United States, Canada,
Puerto Rico, the Bahama Islands and the U.S. Virgin Islands.
What should I do
in order to make sure the home I buy will be
safeguarded with title insurance?
Insist on title coverage at the initial stages of the
transaction. Your attorney will
know how to obtain it.
If the person I
am buying from has title insurance, why do I also
The first and most obvious reason is that the
previous owner could, in a very short time, do all sorts of things to encumber
the title. Among other things, he
or she could grant easements or construct improvements and encroach on adjacent
property. The deed into the new
purchaser could be fatally defective because of forgery or incompetence or any
number of other circumstances.
In addition, if a title defect arises antedating the
date of acquisition by the property
by the grantor to you, you would have to take action against the grantor under
the terms of the deed to you. In
that case, as an insured, the title insurance company would represent the defendant
in your action.
How does title
insurance help protect my home investment?
It places the assets of a corporation behind the
title to your home. If attacked,
the title will be defended without cost to you and if the title, or any
part of it, should be defective, you will be reimbursed, up to the face amount of
your policy, for any financial loss incurred.
How does title
insurance protect both me and my heirs and
A title insurance policy provides coverage from the
time of its effective date back to the origin of title. After the property has passed to your
heirs or devisees, if any defect antedating the policy should crop up, the title
insurance company would defend the title for your heirs and devisees just as it
would for you if you were alive.
Or, if the property were sold under a General
Warranty Deed and the purchaser faced a claim arising within the effective term
of the policy, the purchaser's action for recovery from you or your heirs would be
taken over by the title insurance company according to the terms of the policy
Do many people
their homes because of title
Not if they have title insurance! Title companies realize how important it
isto homeowners to keep their homes. Therefore,
when an insured title is found to be defective, the title company does
everything possible to perfect the title. Often
it is necessary to purchase a claimant's rights in the property and transfer
them to the insured. This is
practically always possible when only a partial interest is outstanding.
Are all titles
Pecan Valley Title Company must turn down some applications. Just
as fire insurance companies will not insure fire traps and life companies will
not insure seriously sick persons, Pecan Valley Title Company will not insure a
This is one of the great values of title insurance
service. If the title is
uninsurable, then it is usually in such a sick" state that
no prudent purchaser would want it. If
the contract specifies that a sale is contingent upon good title being passed on
to the purchaser, the buyer is not obligated to purchase property with an
How are title insurance rates
The policy forms, premium rates, rules and procedures for
title insurance are promulgated and controlled by the Texas Department of
Insurance in accordance with the Texas Insurance Code, Chapter Nine.
Therefore, all title companies charge exactly the same premium rates. Please
see Pecan Valley Title Company's title insurance rates
page for current rates.