Introduction
One of the questions that that our customes ask is "Do I really need title insurance?" The answer is yes!! Statistics demonstrate that in one out of every four real estate transactions there will be a title problem. A deed from the seller does not afford you with all of the protection you need. You need additional protection from the warranties contained in a deed provided to you by the seller. Real estate is this country's biggest asset and will likely be an individual's biggest investment.

When do I need to order title insurance and who pays for it?
There are two types of title policies: An owner's policy and a loan policy.

Owner's Policy: This is a title policy that we issue when real estate is sold from the seller to the buyer. The policy will insure that the buyer will be the owner of the land. The new owner is the insured under the policy. Typically, the listing agent will order title work when a purchase agreement is signed. In a for sale by owner situation, the seller will usually order the title work.

Loan Policy: When an owner or buyer takes out a loan to either refinance the property or to purchase the property, the lender will require the borrower to pay for a title insurance policy insuring that the person borrowing the money is the owner of the property. The lender/mortgage company is the insured under the policy. This type of policy does not insure the current owner. In a refinance situation, the title work is ordered by the loan officer. However, under state law, the borrower has the right to choose the title agency.

In a typical real estate transaction, the seller will pay for the owner's policy and the buyer will pay for the loan policy. In a refinance, the borrower will pay for the loan policy. However, who pays for the policies may be changed by the terms of the real estate contract.

See our summary chart for further details.

Common terms you need to be familiar with

	Title: Some in the real estate industry will refer to the deed you get when you purchase property as the title. It only makes sense-when you purchase a car, you get a title from the dealership or seller saying that you are the owner. However, with real estate, the title to your property means so much more. It is your right to use and possess the property.
	Search: This is an examination of the records in the county where the land is situated. If there are special circumstances involved then a review of circuit and probate court records may be appropriate. Property taxes are also researched as well. This review of records provides advance warning so problems can be eliminated whenever possible-preferably prior to closing.
	Commitment: This is a commitment between the title agent's underwriter and the party to be insured. The title commitment will set forth the legal description of the property, who currently owns the property, other parties who may hold an interest in the property and other items that are impacting the land. These last items can be mortgages, oil and gas leases, judgments, etc. The title commitment will set forth the requirements-those things which must happen in order for the agent to issue the policy. The commitment will also set forth those items that are excluded from coverage. Click here to view a sample commitment.
	Closing: This is the event in which your transaction is finalized. All of the documents that are required to be signed by the lender, realtor and title company to complete the sale or refinance are signed.
	Title Policy: This is the document that the title agent issues after closing that sets forth the legal description of the land, the ownership of the land, and exceptions to coverage. This is just like a policy of insurance issued by your auto and home insurance companies and should be reviewed carefully when you receive it. You should keep the policy in a safe place for two reasons: 1) In the event you sell or refinance the property, the policy may be turned in to the title agency for credit on your new transaction, and 2) In the event that someone claims an interest in your property, you will need to present the policy to your legal representative and title insurer. Click here to view a sample policy.
	Title Search: This is a product issued by a licensed title agent based on a search of the appropriate real estate records. The title search lists the legal description of the property, and any matters that impact the title to the property. It differs from a commitment in that the title search does not commit the title agency to issue a title policy. The search does not set forth exceptions to coverage or requirements to issue a policy. It also does not give an opinion as to ownership. Rather, the search is used primarily for informational purposes. Click here to view a sample search.
	Endorsements: Your title insurance policy will not cover everything. It is just like any other form of insurance, some things are covered and others are not (exclusions from coverage). Depending on the situation you can sometimes buy additional insurance. These pieces of additional insurance are referred to as endorsements. You should contact an attorney to review the title policy to determine if you need additional coverage.
	For Sale By Owner (FSBO): This is when the seller is not utilizing a real estate agent to list the home and is selling the property "By Owner."
	Exclusions: Those matters for which the title insurance provides no coverage.
	Requirements: These are shown on the commitment and set forth what must be done in order for the title agent to issue the title policy.
	Seller's Concessions: There are costs that a buyer would normally pay as part of the buyer's closing costs. However, the seller has agreed to pay some or all of these costs as part of the transaction.

A title insurance policy is like other forms of insurance. However, title insurance varies from other forms of insurance in that it covers events that happened in the past, rather than those in the future. For example, when you purchase an automobile insurance policy you are buying protection for events that occur after the effective date of your coverage. However, title insurance covers for events that occurred before you obtained your interest in the real estate. For example, most title policies set forth that the insured is covered for title claims up to the date set forth on the policy. This means that if someone makes a claim on your title based on an event that occurs after you purchased the property, the title insurance would not cover any damages. However, this does not mean that you do not have other legal remedies available to you.

There is also another significant difference between regular forms of insurance and title insurance. There is no annual premium that you have to pay. There is a one time premium. The only time you may have to pay an additional premium is when you pay for additional coverage.