WHAT IS TITLE INSURANCE
and Why Do I Need It?

Your Homeowners Insurance (Fire Insurance) insures the home and its contents. Title insurance covers the entire property: the home, the land it sits on, and any other structures on the land. Title insurance insures the clear chain of Title. It insures against:

1. A fraudulent Deed.

2. A Deed signed by a person under age.

3. A Deed signed by an insane person or otherwise not competent.

4. A Deed signed by someone with a power of attorney that was executed before that person's death, thus the Deed could be void.

5. A Deed signed by a person other than the owner, but with the same name as the owner.

Title claims constantly arise that come out of marital disputes. Here is an actual example:

The Nelsons want to purchase a property owned by the Hoskins. The Hoskins are in the middle of getting a divorce. Mrs. Hoskins has moved to Australia. When the paperwork is given to Mr. Hoskins to have his wife sign, he explains it will be awhile because he has to send it on to Australia. However, in a few weeks, all paperwork is signed and the property is transferred to the Nelsons.

Two years go by and Mrs. Hoskins arrives at the property, now owned by the Nelsons. She knocks on their door and asks them what they are doing in her house. The Nelsons explain that they purchased the property two years ago from Mr. and Mrs. Hoskins. Mrs. Hoskins says, "You didn't purchase it from me, I never signed anything." Mrs. Hoskins gets a lawyer and very easily proves the signature on the Deed was fraudulently signed by her husband. The house never legally changed hands, so Mrs. Hoskins still owns half of it. Luckily, The Nelsons bought a Title Insurance policy when they purchased the house. The Title Insurance Company handles all the legal issues and pays Mrs. Hoskins the money she is owed. Imagine the nightmare for The Nelsons if there is no Title Insurance policy involved.

Many people buy houses without Title Insurance because the house is brand new. Their thinking is there couldn't be Fraud in the Chain of Title, because this is the first Title. But the land has always been there. There could have been many exchanges of title of the land the home is built on.