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Title insurance is the application of insurance principles to hazards that are present in real estate titles. The actual definition of title insurance is a composite of the answers to the questions that follow.
"Title" is the foundation of ownership of property. It means that you have a legal right to possess that property and use it within the restrictions imposed by authorities or limitations on its use-superimposed on the basic right to possession by previous owners.
Because the life of any other property isn't comparable to the life of land. Owners die, new ones succeed, but land lasts forever. People who own goods may change their locations at will, but land is immobile. Because it's both permanent and immovable, it lends itself to the absorption of innumerable rights. Lawyers and jurists formed a separate body of laws for land. These laws, creating many types of rights in land, are so numerous and complicated that it's impossible for there to be a mathematical certainty of ownership.
Many common encumbrances can be placed on land. The most common is a mortgage. As long as the mortgage (or any portion of it) is outstanding, only a limited title can be passed. Other common limitations include granting the right to cross the property with electric and telephone lines, an underground cable or sewer line. A family burial plot establishes a sanctified spot for all time. An ordinance may restrict land to residential use, or it may prohibit construction of a building closer than a specified number of feet from the street line.
A title defect is anything in the entire history of ownership of a piece of real estate that may encumber the owner's right to the "peaceful enjoyment" of the property or that may cause the owner to lose any portion of the property.
Without title insurance, you become a self-insurer. This isn't advisable unless you're in the financial position to lose the money you have invested in your home without upsetting your financial condition in any way.
All attorneys know that there are hazards in real estate titles that cannot possibly be discovered with even the most diligent search of the public records. For example, the attorney can't be sure that the marital rights of all previous owners have been properly relinquished; that all mortgages, judgments, etc. affecting the property have been properly indexed in the record room; that all signatures on all recorded documents are genuine; that no unknown heir of a former owner can appear to assert his or her claim. These are just a few of the matters that can come up to defeat real estate titles. Among others are fraud, duress, infancy, insanity, impersonations, etc.
If you should suffer loss because of any "hidden defects" in a real estate title, an attorney is not liable. Liability extends only to losses caused by oversights or carelessness in the attorney's work. That liability is limited by the attorney's ability to pay, as well as by his or her life span.
A Complete Guide to Title Insurance:
110 Marter Ave
Moorestown, NJ 08057
Collegiate Title Corporation
We are a full service agency that offers complete title insurance protection for commercial and residential properties.