Title Company FAQs | American Dream Title Company

Frequently asked questions

The purchase of real estate is probably the single largest investment you’ll make in your lifetime. Title insurance protects your investment and ensures:

That your rights and interests to the property are protected.

That the transfer of ownership is smoothly completed.

That you receive protection from future claims against the property.

Title Insurance is the most effective, least expensive way to protect your ownership rights. Because land endures over generations, others may develop rights and claims to a particular property even without the owner’s knowledge. The current owner’s rights, which sometimes involve family and heirs, may become clouded. There may be other parties (such as government agencies, public utilities, lenders or private contractors) who also have rights to the property. These interests potentially limit or “cloud” the title of a buyer/owner.

Before your real estate transaction closes, we will perform a comprehensive search of all documents recorded against the property. These records are then examined by an experienced title examiner to determine their impact on the current status of ownership. After examination of title, a title commitment is provided to you and your agent for review. The title commitment sets forth requirements for any documents necessary to clear up issues on title. The title processor and closer then obtain and record the required curative documents prior to closing. This process enables pending title problems to be identified and cleared prior to your purchase or refinance of the property.

Even after the most careful research, some title flaws may go undetected. Among the more common flaws to title are: forgery, invalid court proceedings, mistaken legal interpretations, defective deeds, confusion due to similarity of names, previously unrecognized rights of spouses and undisclosed heirs. These title flaws may surface at any time which is exactly why title insurance is so important.

Protection against title flaws and other claims is provided by the title insurance policy which is issued after your transaction is complete. Two types of title policies that are issued are:

An owner’s title policy which covers the buyer for the full amount paid for the property

A lender’s title policy which covers the lending institution’s investment over the life of the loan.

When the owner’s and lender’s policy are purchased at the same time, a substantial discount applies in conjunction with the simultaneous issue. Lenders almost without exception require the buyer to purchase lender’s title insurance coverage. Unlike other types of insurance, your title insurance policy requires only one moderate premium for a policy which protects you and your heirs for as long as you own the property. There is no renewal premium required.

The title policy covers legal defense of your title for any defect covered under the policy’s terms and also covers reimbursement to you for actual financial losses up to the policy limits.

Title insurance can protect a buyer against title defects that may occur from a covered risk. There are a number of problems that can arise and may result in the complete or partial loss of real estate. Even the most careful search of the public records may not find every title problem. Since some problems are hidden, your title may appear to be perfect when there may actually be a title issue waiting to surface. With owner’s title insurance, a title insurer will defend you against an attack on the title to your property as insured. If this attack is successful, the title insurer will indemnify you against the loss up to the policy limit.

Most insurance covers tangible items and title insurance covers against loss or damage resulting from defects or failure of title on a particular piece of real property.

Also, the premium for title insurance is only paid once when the policy goes into effect. With other types of insurance, premiums are paid in installments until the policy is cancelled.

A title commitment is a report issued by a title insurance company or its agent. The title commitment describes the property and sets forth the record title owner. Schedule B-I of the title commitment lists title requirements which must be satisfied prior to closing. These requirements may include payoff of liens or judgments and any necessary corrective deeds or other documents. Schedule B-II of the title commitment lists certain exceptions such as easements, oil and gas leases, restrictive covenants and future property taxes.

A title policy is issued upon the finalization of the transaction. It consists of Schedules A and B. The two schedules list the information as referenced on the title commitment and any matters effecting changes to the title at closing. The title policy itself is a contract between the insured and the underwriter insuring against loss in the event a defect in the title is discovered. The two policies which may be issued are an Owner’s Title Policy and a Mortgagee Title Policy.

The insured in an Owner’s Title Policy is the owner as shown on the recorded deed. It insures the owner of the property against defects in the title subject to any exceptions listed in Schedule B.

A Mortgagee Title Policy insures a lender against loss caused by invalid title in the borrower, or loss of priority of the lender’s mortgage subject to any exceptions listed in the policy.

This list will give you an idea of the types of title problems which may occur:

Defective notarial acknowledgments.
Deeds by minors.
Inadequate legal descriptions.
Easements established through continued use but not discovered by a survey or in the public record.
Mistakes in recording legal documents.
Mistaken reports furnished from taxing authorities.
Misinterpretation of wills.
Errors in tax records. (For example, listing payment against wrong property account.)
Falsification of records.
Deeds to or from defunct corporations.
Marital rights of spouse allegedly, but not legally, divorced.
Liens or judgments on the property
Unresolved code violations