The Real Estate Title and Title Insurance

What is a Real Estate Title?

A real estate title is essentially a document that guarantees you a number of rights and privileges over a piece of property. Before you agree to purchase a home, it’s important to make sure that it will be yours free and clear after you’ve signed the contract and that no other lien holders, lenders, or property owners have any claim to the home you’re interested in buying. This means securing the title- i.e. the rights to that property -for yourself. The title will detail the home ownership and property rights for every person who has a claim on the property (if more than one person). The types of rights generally included in a title include the following:
 

Common Property Title Rights
  • Sole ownership/possession of the property
  • Full use of the property
  • Complete transfer of property rights
  • Partition/the right to divide the property
  • The right to maintain control over pledged collateral
  • Access to the property (this includes if a pathway to the property must cut through another property)
  • Timber, land, or farming rights- when applicable
  • The right to rent the property to others
  • Development rights- when applicable
  • Easement/ access to neighboring property for necessary use (utility lines, etc.)
  • Right to sell the property

 

Your specific title may grant all or only some of the above rights, depending on the property types and location. In addition to the above rights, once you have paid off your mortgage and the home is entirely yours, you have the right to destroy, sell or give the property away (i.e. grant the property title to heirs or other individuals).

 

Securing the Real Estate Title

The most important thing you can do is have an agent or title insurer perform a real estate title search before you sign any contract. A property title search will show who else has rights to that specific piece of land or home. Generally, you will do this by paying title insurance as part of the closing costs of the home sale. Title insurance basically asserts your possession rights over the property and will protect you and the lender from any sort of loss or damages that may be associated with disputes over title ownership. You can buy title insurance from an insurance company much the same as you would for your car or other property. The title insurance company will perform a title search, to look for any claims, tax records or liens that could present title issues. Your title insurance policy will detail the types of loss you are insured against, should anyone in the future claim a particular right over the property. There are a few things, however, that title insurance will not cover.
 

Items Not Covered by Title Insurance
  • Defects in the title you were aware of
  • Building and zoning violations
  • Exceptions in property use*
  • Conflicts associated with boundary lines and encroachments

*An exception in property use would basically include any use you agreed to not put the property to when you negotiate the sale. For instance, if you agree to not use the property land for farming and then buy a cow, title insurance will not cover you against any losses incurred from claims that you are misusing the property.

 
If you have questions about how a title search is involved or wish to know more about what is and is not covered by title insurance, do not hesitate to call or contact us today. We are always happy to answer any questions you may have.