A title examination is a study of the records related to the ownership history and any other matters of record that affect the property. Liens, mortgages, judgments, easements, restrictions of use, are all examples of matters that a purchaser needs to be aware of before taking title to the property. When a commitment for title is ordered, a title examiner (a title company employee who often is a lawyer) examines the title history to determine who is the actual owner of the lane, whether there are any defects in or claims against the ownership, and whether any action is needed to make sure the purchaser obtains good record title to the property at closing.
What is title insurance and do I need it?
“Title Insurance” is just that: a policy that insures the status of title in your name as the new owner of the property. Title insurance policies are issued by title insurance companies. The policy protects you against financial loss as a result of “defects” in the title, as well as the cost of defending the title in court. Before issuing a policy, the title company searches and examines documents related to the ownership of and any items affecting the property. It provides a source of indemnification to the named insured if he or she is damaged by a negligent or bad title search or examination and also from hidden defects that would not be discovered in a title search. For instance, a title defect resulting from a forgery would not be revealed in a search or examination of the public records but would be covered by the title insurance policy. Prior to issuance of the title insurance policy a title commitment will be prepared. It contains a list of items that either must be satisfied in order for the title company to issue a “clear title,” or they will be excluded from coverage. Items such as the seller’s mortgage will be “waived” by the title company closing agent when the former mortgage is paid at the closing and will not appear when the policy is issued.
