Under the terms of the Real Estate Settlement Procedures Act (RESPA), the buyer generally has the right to choose the title company when the property is purchased with the assistance of a federally related mortgage loan. The property seller may not require the buyer to purchase title insurance from any specific title company, unless it has been instructed that the seller will pay for both the owner’s and loan policies associated with the real estate transaction.

here are two policies to choose from: an Owner’s Policy of Title Insurance and a

Homeowner’s Policy of Title Insurance. Each offers homeowners confidence and

peace of mind that their title is protected from covered risks.

The Owner’s Policy of Title Insurance offers

standard coverage against common title

defects, including:

• Undisclosed heirs

• Mistakes in recording legal documents

• Errors in tax records

• Someone claiming an ownership interest in

your title

• Leases, contracts or options affecting your title

• Someone claiming to have rights affecting your

title due to forgery or impersonation

• Someone having a right to limit your use of the

land

• Unmarketability of your title

• A defective title

The Homeowner’s Policy of Title Insurance provides

the most complete title coverage available. In

addition to the coverage provided in the Owner’s

Policy of Title Insurance, this policy offers expanded

coverage* for

a total of 32 covered risks. This includes:

• The covered risks listed in the Owner’s Policy of

Title Insurance, PLUS:

• Zoning violations

• Subdivision law violations

• Improvements that encroach into an easement

• Building permit violations

• Covenants, conditions and restriction

• Lack of vehicular and pedestrian access

• Supplemental assessments arising as a result

of construction or a transfer prior to the policy

date or a transfer prior to the policy date

• Damage to your house caused by someone with

easement rights

• A potential buyer refusing to proceed with

purchase due to the discovery of your

neighbor’s structure on your property

• Damage to your house, lawn or trees caused by

someone with rights to dig a well or mine

• And more

*Some coverages are subject to deductibles and liability caps.

Title insurance protects a buyer’s right to ownership and a lender’s investment. On the other hand, homeowner’s insurance is a policy that protects you against potential losses or damage you can experience to the structure of your home or its contents during an insurable incident.

The one-time premium for an owner’s title policy is based on the purchase price of your home and accounts for only a small percentage of your closing costs. Coverage is provided for as long as you and your heirs own the property. When you add up the benefits compared to the costs, an owner’s policy of title insurance is quite reasonable.

Unpaid real estate taxes are a first lien on any real property. If there has been a tax sale or forfeiture or any other objection or protest, it means that there are complications standing in the way of a clear title.

Taxes must be current at the time of closing. Any taxes accrued, but not billed, are prorated based on calendar days of ownership for each party. At closing a credit is given to the buyer from the seller for the portion of the year that the seller owned the home. When the tax bill is later mailed to the buyer, the buyer already received a credit for the portion of the year the seller lived there.

Special assessments must be current, also. It can be negotiated which party will be responsible for future payments due, but most often it is the buyer.

Any person or financial institution that lends money on real estate wants that investment protected. Mortgage title insurance assure the lender that the mortgage is a valid first lien protected against hidden as well as known defects in the title as insured. Such a policy affords the only way a lender can be certain about the title which may be acquired in the event of a foreclosure. A mortgage title insurance policy protects only the lender’s interest in the property, not the current owner.

Not at all. A deed is merely an instrument whereby a seller transfers his or her right of ownership (whatever it might be) to you. It is not proof that the person described as the seller is actually the owner. It does not do away with claims or rights others may have in the property. From the deed, you cannot determine what rights, liens, or claims may be outstanding against your title.