What is Title Insurance?

Insurance that protects the owner or mortgage holder of real estate from lawsuits or claims arising from a defective title.

Is Title Insurance just like other insurance?

Title Insurance insures against events that happened in the past that affect title to the property. Other types of insurance protect against events in the future.

Do I need Title Insurance?

Title insurance is a way of protecting yourself from financial loss in the case that problems develop regarding the rights to ownership of your property. In addition to protection from financial loss, title insurance pays the cost of defending against any covered claim.

Can one get title insurance on any property?

Title insurance is not intended for titles known to be bad or defective.

How does a title agency determine if it will insure the property?

Before issuing a title policy a search is made of county real property records. This search is done by using the company abstract plant which maintains references to deeds, mortgages, liens, deaths, divorces, etc. which might affect the property.

These instruments are examined by the title agency.

The results of the examination determine whether the title agency will issue a policy and what exceptions to coverage will be taken in the policy. The search and the commitment are not representations as to title but are done for title insuring purposes.

Is there only one type of Title Insurance Policy?

No. The most often requested policies are:

Owners Title Policy: Protects the owner of the property while he is the owner and after the property is sold.

Mortgagee Title Policy: Protects lender from loss if it is determined that its lien is not valid or is inferior to another lien not shown as an exception to coverage on the policy.

Leasehold Title Policy: Insures against losses a tenant may suffer in the event the landlord does not own the property.

Who pays for title insurance?

This will depend on the terms of your contract. If it is a sale, it will be included in the costs of your loan.

Typically, a seller pays to have title research brought up to date, pays the cost of recording a Warranty Deed, and provides the buyer with a policy insuring the buyer’s interest. However, this is negotiable at the time the contract is being drawn up. Typically, the buyer pays for loan fees and the cost of the loan policy. Again, this would depend on the contract negotiated by the parties involved.

What Is Title Insurance Premium?

A Title Insurance Premium is a rate of insurance charged by the Agent, that has been submitted to the Missouri Department of Insurance by that Agent's Underwriter. Each Underwriter has their own rates which are submitted and approved.

What can make a Title Defective?

Any number of problems that remain undisclosed after even the most meticulous search of public records can make a title defective. These hidden "defects" are dangerous indeed because you may not learn of them for many months or years. They could force you to spend substantial sums on a legal defense, and still result in the loss of your property.

What is the amount of coverage?

Owners Title Policy - The policy will be issued in the amount of the current sales price. If there is no sale, the policy must be issued for the fair market value of the property.

Mortgagee Title Policy - The policy will be issued in an amount equal to the current outstanding loan balance.

Leasehold Title Policy - The policy will be issued in an amount equal to one of the following: The total amount of rentals payable under the lease contract, or the value of the land and any existing improvements, or the value of the land and any existing improvements and the costs of improvements immediately contemplated to be built on the property.

How long does my insurance coverage last?

For as long as you or your heirs retain an interest in the property.

What does a title policy not cover?

Title insurance doesn't protect you from problems you create or problems unrelated to your or the lender's property interests. It also doesn't cover losses listed under your policy's exclusions or exceptions.

How much does title insurance cost?

The premium for each title insurance fee is based upon the value or sales price of the property (owner’s policy) or the amount of the loan to be issued (loan policy). Prices may vary from county to county or from state to state, so contact us for a premium quote on your particular transaction.

I got title insurance when I bought my property. Now that I am refinancing, why do I need a new title insurance policy?

When you purchased your property, you received an Owner’s Policy of title insurance. That policy protects your ownership interest as long as you or your heirs have an interest in the property.

Your lender needs a Loan Policy to protect the interests of the loan company and to insure their investment. The lender will want assurance that title to the property is clear, that there are no mechanics’ liens filed by a contractor who claims he/she has not been paid for construction on the property. Perhaps a judgment has been placed against your home due to unpaid taxes or homeowner Association dues. The loan company with which you are working will want to be certain of the “position” of their new loan and where it will stand in line with your existing liens, if any.

I am buying a newly built home. Since I am the first owner, do I need title insurance?

You may be the first owner of the home, but you are not the first owner of the property.

Once the property entered a development phase, ownership may have been passed from developer to developer to builder, each needing to prove their ownership in order to obtain funds from a lender who financed their part the development. After all of that activity, you want to be sure that the title is clearly held by whatever individual or company is selling to you.

You will also want to be certain that the developers and builders paid their subcontractors and suppliers and that no liens were placed on your property because of claims of non-payment.

But the lender already requires Title Insurance, won’t that protect me?

There are two types of Title Insurance. Your lender likely will require that you purchase a Lender's Policy. This policy only insures that the financial institution has a valid, enforceable lien on the property. Most lenders require this type of insurance, and typically require the borrower to pay for it.

An Owner's Policy on the other hand is designed to protect you from title defects that existed prior to the issue date of your policy. Title troubles, such as improper estate proceedings or pending legal action, could put your equity at serious risk. If a valid claim is filed, in addition to financial loss up to the face amount of the policy, your owner's title policy covers the full cost of any legal defense of your title.

When should I look into purchasing Title Insurance?

As soon as you and the seller sign the real estate contract. There are a number of steps that must be taken to research the title, it is wise to get the ball rolling as soon as possible.

What Is a Title Search?

A title search is the process of determining from the public record just what these rights are and who owns them. A title search is a means of determining that the person who is selling the property really has the right to sell it and that the buyer is getting all the rights to the property (title) that is being purchased. In those transactions where title insurance is involved, the title agency must determine insurability of the title as part of the search process.

Are there any problems that a title search cannot reveal?

There are some "hidden hazards" that even the most diligent title search may never reveal. For instance, the previous owner could have incorrectly stated his marital status, resulting in a possible claim by his legal spouse. Other "hidden hazards" include fraud and forgery, defective deeds, mental incompetence, confusion due to similar or identical names and clerical errors in the records. These defects can arise after you've purchased your home and can jeopardize your right to ownership.

What Is a Commitment?

A commitment is a summary of pertinent information discovered in the search process that is used as the basis for clearing title and issuing a clear or marketable title policy to an owner and/or lender. The title commitment is made up of 3 sections:

  • Schedule A
  • Schedule B, Section I
  • Schedule B, Section II

What Is a Closing?

The escrow officer or realtor will contact all parties to schedule a closing date that is convenient to all concerned. The purchaser or borrower is notified what to bring to closing (i.e. cashier's check, curative matters, etc.) All parties meet (either together or separately) with the closer to execute all documents required to complete the transaction.

What Is a Settlement Statement?

A list of all charges and payments involved with the transaction. The closing statement should accurately depict the transaction being completed.

I want to split off some of my property to develop a few residential lots. Can your title agency help me with this?

There are many parts of your subdivision that we can help you with, but you will also need to work closely with your county’s Planning and Zoning department. First, give them a call (Contact us if you are not sure how to reach your Planning and Zoning board.), to get the most up-to-date information regarding zoning requirements.

We can provide you with a map showing all the properties within the specified range. We will research the ownership of each of the affected properties and compile a list—with mailing addresses—so you can meet the requirements of the Planning and Zoning board regarding certified notice to property owners.

Plan ahead so you can give us advance notice of your research needs. This is a time-consuming process, and we want to help you meet your deadline. There is an additional charge for “rush” zoning requests because of the intensive staff time that is involved.

In addition to preparing materials for your Zoning application, we can work with you on title insurance, document preparation and recording, and many other details.

As my spouse & I get older, we want to be sure that our property matters are settled so they don’tt become a burden on our children. What are some of our options?

There are as many options as there are families who want to make these provisions. You need to talk with your attorney to make sure that all the related matters that affect distribution of property are also taken care of in a way that will not muddy title or delay execution of your wishes.

That said, there is some general information that we can provide without making a recommendation as to what would work best for you.

A “Beneficiary Deed” or “Transfer on Death Deed” provides for the instant transfer of property upon the death of the last of the parties named. This will, in many cases, eliminate the need for lengthy probate proceedings prior to distribution of the property. Be sure that such a deed does not conflict with your last will. This type of deed only grants to your heir(s) the interest which you hold in the property at the time of death. That means that if you sell off any portion or the entire property prior to your death, the beneficiary deed would not hamper your ability to do that, and only the property remaining in your name would transfer at death.

If you divide the property prior to your death, you may choose to reserve a “Life Estate” for yourself and/or your spouse. This assures that ownership is transferred by warranty deed, even while making provision for you to live in your home and have use for the rest of your life of whatever portion of the property you choose to set aside.

If I inherited property, does my spouse have the right to sell it after my death if I want it to go to our children?

There are many factors that could play into this, and you would be wise to consult an attorney regarding your own situation. Your attorney will want to review the documents by which you received the property—and any additional documents recorded since that time—before giving a definitive answer.

The owner of the property has a deed. Isn’t that proof of ownership?

A deed is just a document by which the right of ownership in land is transferred, whatever that right may be. It's not proof of ownership, and it doesn't do away with rights others may have in the property. In addition, a deed won't show you liens or claims that may be outstanding against the title.