Motor Insurance Questions and Answers.
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Title Insurance is insurance against loss from defects in title to real property and from the invalidity or unenforceability of mortgage liens.
Before a home is purchased, both the ownership and the land on which it stands may have gone through several changes. There could be unforeseen problems that could emerge at any point. For example, a signature may have been forged in transferring title, or there may be unpaid real estate taxes or other items.
Title Insurance covers the insured party for any claims and legal fees that arise from such problems.
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Title Insurance offers protection against claims resulting from various defects (as set out in the policy) which may exist in the title to a specific parcel or real property, effective on the issue date of the policy. For example, a person might claim to have a deed or lease giving them ownership or the right to possess your property. Another person could claim to hold an easement giving them a right of access across your land. Yet another person may claim that they have a lien on your property securing the repayment of a debt.
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What does Title Insurance Protect Against |
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Here are just a few of the most common hidden risks that can cause loss of title or create an encumbrance on a title
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False impersonation of the true owner of the property |
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Forged deeds, releases or wills |
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Undisclosed or missing heirs |
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Instruments executed under invalid or expired Power of Attorney |
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Mistakes in recording legal documents |
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Misinterpretations of wills |
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Deeds by persons of unsound mind |
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Deeds by minors |
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Deeds by persons supposedly single, but in fact married |
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Liens for unpaid estate, inheritance, income or gift taxes |
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Fraud
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A Title Insurance policy contains provisions for the payment of the legal fees in defence
of a claim against your property which is covered under your policy. It also contains
provisions for indemnification against losses which result from a covered claim. A premium is paid at the close of the transaction. There are no continuing premiums due, as there are with other types of insurance.
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Buyers and lenders in real estate transactions need title insurance. Both want to know
that the property they are involved with is insured against title defects.
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The benefits of Title Insurance include but are not limited to the following:
Mortgage proceeds are disbursed in a shorter time than with the traditional mortgage
process (without title insurance), resulting in a shorter processing time for property sale transactions.
Majority if not all property defects present at the time of the issuing of the policy are identified, therefore enabling the owner/mortgagor to make informed decisions regarding the sale and or purchase of the property.
Title Insurance also covers matters relating to unknown defects that may surface after the mortgage has been disbursed which includes but are not limited to the invalidity of any documents which the title is based because of incorrect execution, lack of right of access to the property and estate or inheritance taxes due on the property.
Matters such as boundary encroachments, breach of restrictive covenants, and other parties claiming an interest in the property are also covered by the policy.
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The cost to obtain Title Insurance is minimal. The fact that Title Insurance changes the roles of parties in the transaction, the total cost to obtain a mortgage that includes Title Insurance will in fact work out to be lower. In addition, there is always the possibility that in the future unforeseen issues may arise. The security that Title Insurance provides when dealing with these issues is much more cost effective and reassuring than having to deal with them wholly and solely by sourcing funds out of pocket or obtaining reliable legal representation.
Title Insurance will deal with all the hassles involved in resolving property defects
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Purchasing title insurance to acquire your mortgage for a property is not mandatory but is highly recommended because of the benefits. All mortgage lenders require protection for an amount equal to the loan amount. It lasts until the loan is repaid. When acquiring a loan the title insurance is required to protect the lender, but the consumer pays the premium. The premium is a single payment made upfront at the time of closing.
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There are two types of policies issued: An “owner’s” policy which insures the homebuyer for as long as they and their heirs own the home; and a “lender’s” policy which insures the priority of the lender’s security interest over the claims that others may have in the property.
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No, title policies are indemnity policies. That means that they protect against loss. The lender’s policy would, therefore, only cover a loss on the lenders part. Take into account though the fact that the insurer issued a policy to the lender which indicated that the title has been searched and nothing amiss has been found, but no search is 100% dependable. That is why the policy is issued.
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Indefinitely. The owner’s protection lasts as long as there is an interest or any obligation with regard to the property by the owner or any heirs. When the property is sold, the lender will require the purchaser to obtain a new policy. The new policy will protect the lender against any liens or other claims against the property that may have arisen since the date of the previous policy.
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