Allied Newsletter
What is Title Insurance & Escrow/Closing?
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What is Title Insurance?
Fire insurance protects you against losses from fire. Collision insurance guards you against the cost of a damaged car. Theft insurance-well, you get the idea.
Title insurance protects the title to real estate that you are about to acquire. To understand why title protection is essential, we need to consider real estate for a moment.
Your Ownership of Real Estate
Real estate has always been considered man's most valuable
possession. It is so basic a form of wealth that many special
laws have been enacted to protect ownership of land and the
buildings which stand on it. You should realize whenever you buy
property that the owner who is selling it to you has extremely
strong rights, as does his/her family and heirs. There may be
others-in addition to the owner-who have "rights" in
the property you are going to buy. Governmental bodies or
contractors, for example.
Some of the things that a title search uncovers are any unpaid taxes or mortgages, judgments against previous owners, easements, and other court actions or recorded documents which can affect title to real estate. We find and report such defects in the title to the real estate you wish to buy, so that these matters can be corrected. This is the first benefit you receive when title insurance is ordered.
How Does a Title Insurance Policy Protect Against These
Damages?
If a claim is made against your title as covered by your
policy, Fidelity National Title protects you by:
- Defending your title, in court if necessary, at our expense; or
- Bearing the cost of settling the claim,if it proves valid, in order to perfect your title and keep you in possession of the property; or
- Paying you for a covered loss.
Title insurance insures against loss or damage by reason of covered matters, which have not been excluded or excepted from coverage. And-
It is insurance that, if any unexcepted claim covered by your policy arises out of the past to threaten your ownership of real estate, it will be disposed of, or you will be reimbursed, exactly as your title insurance policy provides. Likewise, the original premium is your only cost as long as you own the property! There are no annual payments to keep your Owners Title Insurance Policy in force.
What Is Escrow/Closing?
An escrow is created when money and/or documents are deposited, by two or more persons, with a third party which are to be delivered upon the happening of certain conditions. The third party is known as the escrow agent or escrow holder.
The authority given to an escrow holder is strictly limited by instructions provided by the parties involved. Consequently, an escrow holder acts on mutual instructions deposited into escrow and DOES NOT represent any party. The escrow officer is authorized by instructions to allocate funds for items during the escrow period, such as real estate commissions, title insurance, liens, recording fees and other closing costs. Instructions also specify the method of collecting funds, proration issues, time limitations and the term of the transaction. The escrow process protects all parties involved by retaining money and documents until the mutual instructions are met.
