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Overview of Title Assurance & Indemnity Corporation Examinations and Title Commitments
Almost every real estate transaction requires a title examination
and the issuance of a title insurance policy prior to closing. You
may have already purchased or sold property and had a title search
or policy purchased on your behalf. Nevertheless, many consumers
are unaware of the significance of title examinations and their
implications. At Title Assurance & Indemnity Corporation, comprehensive and world
class title service is our sole focus. In that spirit, we are
pleased to provide this overview of the aspects of title work and
how our company delivers tremendous value to our clients.
The
most accurate description of “title” to a property is a bundle of
rights in real property. A title search is the process of
determining from the public record just what these rights are and
who owns them. Specifically, a title search is a means of
determining that the person who is selling the property really has
the right to sell it, and the buyer is getting all the rights to the
property (title) that he or she is paying for.
In
most real estate transactions, a title insurance policy is purchased
to assure the buyer that he or she has purchased a valid title.
In
those transactions where title insurance is involved, the title
company must determine insurability of the title as part of the
search process. This search is the first step a title company takes
before the issuance of a title policy. This policy protects the
buyer against title defects or unknown claims. In the event that a
“defect” later appears on title, or if previously unknown heirs
surface valid claims to a property, the title insurance company
will, at its own expense, defend the title and will pay losses
within coverage of the policy.
Title Assurance & Indemnity Corporation is pleased to provide you with the following
step-by step review of title examinations, culminating in the
issuance of a title commitment:
Chain of Title
A “chain
of title” is simply a history of the ownership of a particular piece
of property, telling who bought it and sold it and on what date. The
information may be derived from public records – usually a County
Clerk’s or Recorder’s Office – or obtained from information that is
privately owned and maintained by title companies.
Tax Search
A “tax
search” is conducted by Title Assurance & Indemnity Corporation to determine the
present status of general real estate taxes against the property.
This tax search will reveal if taxes are past due and unpaid from
previous years. In addition, the tax search will indicate the
existence of any special assessments against the land and, if so,
whether or not these assessments are current or past due.
A due
and unpaid tax or special assessment is a prior lien or claim on the
property above all others. If a buyer purchases property with unpaid
and past due taxes or assessments against it, he or she is likely to
find out the taxing authority has placed the property up for sale to
pay those taxes or assessments. A tax search reveals the status of
taxes. Title insurance protects the buyer against loss from unpaid
and past due taxes, late fees and assessments, generally by
requiring the seller to pay all back taxes prior to closing a
transaction and tendering title to the buyer.
Judgment and Name Search
One of
the most important parts of the title search is to determine if
there are any unsatisfied judgments against the seller or previous
owners which were in existence while they owned the title. A
judgment is a general lien against the debtor’s real estate and
constitutes security for any money owned under the judgment.
It is
extremely important to be sure that a title is not subject to
judgments against the seller or previous owners. A thorough title
examination generally reveals such judgments and a title insurance
policy provides additional protection to the buyer in the event that
judgments were overlooked but are discovered after closing. Name
searches can be tricky because, for instance, a judgment against a
person named “Smith” may affect the title of a seller named “Smith”,
depending on whether or not they are the same person. At the
Title Assurance & Indemnity Corporation, we undertake exhaustive searches – including
all possible variations of the name in question – to provide our
clients with assurances that the title is not encumbered with
judgments.
Rights
established by judgment decrees, unpaid federal income taxes and
mechanics’ liens all may be prior claims on the property, ahead of
the buyer’s or lender’s rights. When judgments are discovered, the
seller must eliminate them before the title of the new buyer can be
insured free and clear of judgment.
Title Commitment
When the searches outlined above have been completed, Title Assurance & Indemnity Corporation issues a commitment to insure, stating the conditions under
which it will insure the title. The buyer, seller and the mortgage
lender can proceed with the closing of the transaction after
clearing up any defects in the title which may have been uncovered
by the search and examination.
The
mortgage lender is as concerned as the buyer about the quality of
the title because the property is to be security for the new
mortgage loan. Lenders require assurance that it has a valid first
(or another acceptable priority) mortgage lien on the property.
Generally this priority lien position is a legal requirement of
regulated mortgage lenders, while also protecting their collateral
and rights in the event of a default.
The
lender’s title insurance, however, does not protect the new
buyer of the property. Although the property in question is the
same, the interest of the lender is very different. Specifically,
the lender is concerned about the funds they have loaned against the
property be secure; they do not have a duty to make sure that any
equity or appreciation of the property – which belongs to the owner
– is safe. As a result, the provisions of a lender’s title
insurance policy are very different from those of an owner’s policy,
so most buyers find it valuable to obtain their own “Owners Policy”
to fully protect their individual interests.
Buyers,
sellers and members of the financial service community all have come
to recognize and appreciate the assurance and peace of mind that
comes along with a title insurance policy procured on their behalf
by the Title Assurance & Indemnity Corporation. We are looking forward to adding you
to our fine roster of satisfied clients throughout America!
Corporate and General Offices: 815 Superior Avenue, 16th Floor,
Cleveland, OH 44114
Phone
# 216-348-0400
Fax
# 216-348-0410
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