Having title insurance in place will provide protection against third-party claims on a property. It will also give you the right to defend a claim.
Lender’s title insurance
During a real estate transaction, the title of a property plays an important role. If any defects appear on the title, it can impact the lender’s financial interests and make it harder to collect payment. Therefore, it is essential that buyers check for any issues before completing the purchase of a home. It is also advisable to shop around for a good title company.
Lender’s title insurance is a type of policy that insures a lender’s interest in a loan. It protects the lender from loss, liability and other damage related to title problems. Lender’s title insurance is an additional cost associated with most mortgages. The cost is typically equal to one percent or less of the value of the house. The price is usually paid by the buyer in advance of closing. In some states, sellers may also be involved in paying for the title insurance.
Lender’s title insurance provides coverage against various unrecorded liens, access rights and mechanics liens. It also provides protection against back taxes that are neglected. The most common claims against the title are liens, conflicting wills and unpaid real estate taxes. In addition to these common occurrences, lenders are aware of the costs involved in defending their titles. In some cases, a second policy is required.
The title company searches the property for any potential problems. If a problem exists, they clear the title of the defects. In some cases, the title company agrees to defend the lender in court. The title company also clears any exceptions that are included in the chain of title. This helps ensure the property is free from legal and financial frailties. The title search serves as the ultimate seal of approval on the property.
If the property is owned by a bank or a lending institution, it may be necessary for the lender to obtain Lender’s title insurance. These policies are primarily issued to protect the financial interest of the lender. The lender can also obtain an Errors and Omissions (E&O) policy to protect the lender from bad advice. These policies also cover professional negligence claims.
In some states, there are fixed premiums for lender’s title insurance. In other states, the cost can vary according to the location and other factors. The average cost for title insurance is one percent to 1.2% of the value of the house. In some states, such as California, the premiums are highly flexible. In other states, such as New Mexico, the cost can be even lower.
Lender’s title insurance is an important part of a mortgage. It will protect the lender and homebuyer from any problems that could occur with the title of a property. It can also cover the costs of researching and defending a possible claim. It is usually paid by the buyer in addition to the mortgage amount. In some states, it is required by law.
Third-party claims on a property
Purchasing title insurance can protect you from loss of or damage to your property. A title search may reveal other people’s rights to your land, including a third party’s claim to drive over your property or place a lien on it. If you don’t purchase insurance, you can be stuck with the bill.
The best way to go about this is to ask your lawyer for a free consultation. If you’re lucky, he or she will have a number of recommendations on how to proceed. It’s also a good idea to find out if your lawyer is aware of any recent litigation. Your lawyer will be able to tell you which claims to dismiss and which claims to pursue.
The first thing to do is to identify the claim. You will likely receive a notice of claim from the title company in the mail. If you are not the recipient of such an offer, you might as well make a claim to the court. You can then file a counterclaim, but you won’t be able to sue the other party, so your lawyer will have to do the heavy lifting. If you are involved in a dispute, consider hiring a competent attorney to help you sort the weeds from the wheat.
The other trick is to determine if the other party will sue you in the first place. For example, if you own a piece of property that you are renting to a tenant, your lawyer will know whether or not the tenant has the legal right to occupy it. On the other hand, if you own a parcel of land, you are likely to be subject to claims by an unpaid construction company or a repossessed tax assessor’s office.
Duty to defend
Buying title insurance is an insurance policy that protects a property owner from loss. In most cases, the lender will require an insurance policy on the borrower’s property. However, a homeowner may choose to purchase a separate owner’s policy to protect their property. In some instances, the title insurer is obligated to defend the insured. In some instances, the insurer may be required to pay the costs of legal defense, which can reach into the thousands in the case of a home sale. The title insurer is also liable for any losses caused by the wrongful acts of the insured.
The best way to figure out whether or not a title insurer has a duty to defend is to look at the language in the policy. This is especially true in the era of digital mortgages. For instance, a lender may foreclose on the borrower’s home because he didn’t pay the mortgage. Even in the absence of a mortgage, a borrower may raise a slew of defenses against the lender. In any event, a title insurer is a necessary evil in most cases. In fact, many lenders will require their borrowers to obtain a mortgage protection plan in addition to a title insurance policy.
In the insurance world, there is no hard and fast rule about whether a title insurer has a duty to prove that they are the rightful owners of the title to a particular piece of real estate. In some instances, a title insurer may be able to establish that they are not. This is a good reason for a home owner to keep a close eye on their title and its accompanying paperwork. In some cases, a title insurer has the best of intentions, but a lawsuit may be just around the corner. If this is the case, then it’s a good idea to have the title insurer’s top-flight attorneys on speed dial.
Despite the myriad benefits a title insurance policy can offer, some courts have taken the wrong approach. For instance, some courts have not appreciated that a title insurer may have an exemption from the complete defense rule. This is especially true if the alleged infringement is the result of a fraudulent transfer of ownership.