Insuring the Title to Your House
More than simply insuring your possessions, you can insure your ownership of your new dwelling place. Should there be a problem or a dispute of ownership, title insurance is your guarantee to a successful mortgage transaction. You as the buyer will have the opportunity to purchase a title insurance policy and it is important that you understand the process and product.
Much different from home owner’s insurance, Title Insurance is a contract in which the title insurance company, in exchange for a one-time premium at close of escrow, protects against future losses resulting from defects in the title to real property that exist at the time of purchase but are unknown or undisclosed. Should there be a problem with determination of ownership, title insurance protects you against any losses that may already be present because of the situation.
There are two types of title insurance policies – the owner’s policy and the lender’s policy. The owner will typically purchase the Standard Coverage Form in the amount of the purchase price of the property. It covers the buyer’s interest in the property for as long as the buyer or his or her heirs have an interest in the property.
The lender will typically purchase the Extended Coverage Form in an amount equal to the mortgage loan. It covers the lender’s interest in the property for the life of the loan. Owners may elect to purchase a Homeowner’s Policy of Title Insurance instead of the Standard Coverage Form.
Should your title have claims against it, the title insurance policy protects you from any loss due to those claims. It pays your legal costs and the title insurance company is required to defend your title against covered claims and pays successful claims against your title.
Claims typically covered under an owner’s title insurance policy include:
- Someone other than the insured who owns an interest in the property.
- Forgery, fraud, undue influence, duress, incompetency, incapacity or impersonation.
- Defective recording of a document.
- Restrictive covenants.
- Undisclosed liens due to a deed of trust, unpaid taxes, special assessments or homeowners association charges.
- Inability to market the title.
- Lack of access to and from the land.
Ask your title insurance agent to explain what is and is not covered under your title insurance policy.
Payment of Premiums
Title insurance premium is paid once at the time of closing usually through the title agency. It is based on the amount of insurance you purchase, and insurers are required to file and publish their schedule of rates including any discounts or other modifications. Modifications can include discounts for short-term policies or refinances, special rates for large commercial projects and charges for optional endorsements.
In Nevada, the seller usually pays the premium for the owner’s policy and the buyer usually pays the premium for the lender’s policy. This may, however, be negotiated between the buyer and seller.
Purchasing Title Insurance
Although your real estate or mortgage broker will often recommend a particular title agency, Nevada law prohibits them from requiring that consumers use a particular agent or insurer. You may purchase title insurance from any title insurer authorized to do business in Nevada. You may verify that an insurer is authorized in Nevada at www.nvinsurancealert.com or by calling toll-free (888) 467-4195.
Title insurers may offer their policies directly to consumers, through affiliated agents or through independent agents. Different title agents (also known as title companies) may offer different services, and title insurance rates and escrow fees may vary between companies.
Some factors to consider when choosing a title agent or title insurer are the cost of the title insurance and escrow fees, speed and accuracy of closing services, quality and timeliness of claims resolution and frequency and resolution of consumer complaints filed with the Division of Insurance.