• Owner polices remain in effect as long as you or your heirs own a property or are liable for any title warranties made when you sell the property. Because claims can sometimes be made against you when you decide to sell a property you own outright, owner policies provide greater protection.
What a Title Policy Covers
If someone claims an interest in your property, a title company will defend your title in court and pay for any actual loss under circumstances like these:
• A lien against your title exists because a previous owner failed to pay a mortgage or had a judgment against him or her and is attempting to satisfy it using your property. Remember to contact your title company immediately if you receive notice of such problems. Failure to do so could result in many problems, including the loss of property.
• A lien exists for labor and materials furnished by a previous owner’s contractor.
• Leases, contracts, or options on your property were not disclosed to you.
• The seller did not disclose legal restrictions about how you can use your property.
• An easement exists that isn't in public records and that you don't know about. Example: There is another property behind yours that has no direct access to the street. The owner has, therefore, been granted the right to use your driveway. This may prevent you from building on or expanding your property. Your title insurance can help by compensating you for such unknown easements.
• A deed or other document in your chain of title is invalid as a result of forgery or fraud. Example: Two or three owners ago, a document was forged saying that a lien against the property had been satisfied.
Be sure to ask which type of insurance your lender provides. If a title dispute arises, you will need to know. It is important to read your policy carefully. Pay special attention to any limitations, exclusions, exceptions, and special conditions. Discuss these exceptions with an attorney before you close on a real estate deal. Also, check a policy’s description of the land against your survey to be sure the policy covers your property accurately. Title insurance generally does not protect against boundary disputes with neighbors. You may be able to purchase such coverage for an additional premium.
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