WHAT IS TITLE INSURANCE?
A Word About Real Estate
Real estate has traditionally been a family's most valuable asset. It is a form of wealth
that is protected by many laws. These laws have been enacted to protect one's ownership of
real estate and the improvements located on the land. The owner, the owner's family, and the
owner's heirs may have rights or claims in and to the property that you are buying. Those who
may have an interest in or lien upon the property could be governmental bodies, contractors,
lenders, judgment creditors, the Internal Revenue Service, or various other individuals or
corporations. The real estate may be sold to you without the knowledge of the party having a
right or claim in and to the property. In addition, you may purchase the real estate without
having any knowledge of these rights or claims. In either event, these rights or claims remain
attached to the title to the property that you are buying until they are extinguished.
The Past Can Determine Your Future
Generally, a person thinks of insurance in terms of the payment of future loss due to the
occurrence of some future event. For instance, a party obtains automobile insurance in order
to pay for future loss occasioned by a future "fender bender" or for the future theft of the
car. Title insurance is a unique form of insurance. It provides coverage for future claims or
future losses due to title defects which are created by some past event (i.e., event prior to
the acquisition of the property.) These risks are far less obvious than those protected against
by automobile insurance, but can be just as devastating. The following information will answer
some commonly asked questions about title insurance.
How Does Chicago Title Find Out What Title Risks Exist?
In order to determine the status of title, Chicago Title conducts a diligent search of the public
records for those documents associated with the property. Chicago Title then examines those recorded
documents in order to determine if there are any rights or claims that may have an impact upon the
title to the property. The title search may reveal the existence of recorded defects, liens or
encumbrances upon the title such as unpaid taxes, unsatisfied mortgages, judgments and tax liens
against the current or past owners, easements, restrictions and court actions. Matters that are
discovered in the search can be excepted, resolved or extinguished prior to the closing of the
transaction. In addition, you are protected against any loss or damage resulting from recorded
defects, liens or encumbrances that are within the scope of coverage of the particular policy
issued in the transaction.
What About Hidden Title Risks?
The title to the property that you have purchased could be seriously threatened or lost completely
by hazards which are considered "hidden risks." "Hidden Risks" are those matters, rights or claims
that are not shown by the public records and, therefore, are not discoverable by a search and
examination of those public records. Matters such as forgery, incompetency or incapacity of the
parties, fraudulent impersonation, and unknown errors in the records are examples of "hidden risks"
which could provide a basis for a claim after you have purchased the property. The policies issued by
Chicago Title protect you against many of these “hidden risks.”
How Does a Title Insurance Policy Protect an Insured Owner?
In the event of a covered matter affecting your title, your insurance policy may protect you in various
ways including: (1) Defending your title, (2) Bearing the cost of settling the covered matter, or
(3) Paying you for the loss due to the covered matter.
Only One Premium
Unlike other forms of insurance, the original premium is your only cost as long as you own the property.
There are no annual payments to keep your Owner's Title Insurance Policy in force.