Title insurance is issued to protect you the owner or the buyer of a property against ownership claims. Title insurance is a one time premium that protects against past events. That protection includes claims to the rights of the property. These can include false claims, forgeries, forgotten heirs to a property or claims to anyone.
The title order process is as follows:
- The property goes under contract and contract is provided to the title company.
- The title company will research the title work spending form 5 to 7 business days
- Title commitment is issued along with a list of requirements.
- The requirements are satisfied so that clear title can be provided
- Closing of the property
- Final Title policy is issued about 30 days after closing.
When title search is pulled, as a part of the under contract period, research is done to see what encumbrances there are on the property and what claims there are. When this research is done the title company can find a problem that needs to be resolved prior to closing approximately 36% of the time. These problems can be anything from a name that has to be verified, to a mechanics lien that is on the property that has to be verified. The under contract process provides the title company with time to do the research so that they are able to provide a marketable title, that can be transferred to the new owner (buyer).
The title commitment is issued and provides information regarding the property. It is the report that is provided to the parties after the research has been completed. The commitment provides information regarding liens against the property and the person in title on the property. The requirements, that are a part of the title commitment, will tell what needs to be satisfied so that a clear title can be provided at closing. The list of requirement are listed Schedule B of the title work. This will include the list of liens that must be paid off and what liens must be added. For example the new mortgage for the buyer. The list of requirements might also require that the seller provide an improvement location certificate (ILC) for the property. Another important section of title work is schedule B part II. This section of title work includes any easements that are on the property in addition to convenance, conditions and restrictions (CC and R’S) if the property is within an HOA. This is important to read to make sure that the CC and R’s can be abided by.
The next things that occurs is the property is closed. The title company participates in the closing on the property making sure that all documents are signed properly at closing, liens are paid off and all documents are properly recorded.
Approximately 30 days after closing the final title policy is issued and mailed out to the buyer. The transaction is complete. The title policy lasts for as long as the person owns the property.