Property Ownership: The Whole Story

Life and Liberty are secure only so long as the right to property is secure. This is one of the principles adopted by the founders of our country and writers of our U.S. Constitution.

How Do You Know the Land You Bought is Really Yours?

Buying real estate is unquestionably an important investment, usually the largest investment the average person makes during his or her lifetime. The soundness of that investment largely depends on the condition of the title to the land, because what you buy is not land, but the title to it.

Land is both permanent and immovable. No other property has such a useful life associated with it. Owners eventually die, and new ones take over; the title itself can be sold, exchanged, borrowed upon, given away-but the land itself goes on indefinitely. Its appearance may change, but its location doesn't.

Because of these factors, a completely different set of laws and procedures govern real estate. These laws and practices are so numerous and complicated that it's impossible to be certain that the title has no defects which would impair your right to the use of the land.

For example, there are many possible defects in titles that could be so well hidden that even the most painstaking examination of the records cannot discover them: defects arising from fraud, forgery, insufficiency of deeds or other documents, persons of unsound mind, missing heirs, widow's dower, rights of divorced persons, or a child born after the making of a will-these and multiple other circumstances can arise to impair the title to your property and your investment in it.

Financial institutions that lend money on real estate as security recognize these kinds of risks. They can't afford to assume the risks, and thus require a title insurance policy for their protection.

But note that it is only for their protection! The mortgagee's (lender's) policy issued on your property will not protect you, because:

The title company's duty is to protect only the mortgagee or lending institution, because the lender is the insured, not the property owner.
The title insurance policy is issued only in the amount of the mortgage; as you make payments and reduce the amount of the mortgage, the insurance provided by the mortgagee policy is reduced accordingly.

You should protect yourself at the time you buy real estate by requesting an owner's policy for the full purchase price, naming you as the insured. There is a premium rate discount offered if you buy an owner's policy at the same time the mortgagee policy is issued. There is no recurring premium to pay for title insurance; you pay only the initial premium for the policy-and the coverage continues indefinitely, even extending to your heirs for as long as they have any interest in the property.

An owner's title insurance policy will assure that you:

Are protected against financial loss that you may suffer because of concealed title defects that cannot possibly be discovered by title examiners.
Are protected against human errors of title examiners and others that may cause you financial loss.
Are protected by the knowledge, skill, and expertise of title insurance professionals who base their decisions on an exhaustive search of your title and whose broad objective is to eliminate guesswork and the probability of loss.
Have a written guarantee that the title insurance company will undertake, at its own expense, to defend your title in all legal actions or proceedings alleging the title to be other than as insured.
Have a definite insurance contract indemnifying you, according to its terms, against loss or damage due to title defects and backed by the known assets and reserves of the title insurance company.
Will have no recurring premium to pay for title insurance. Remember, you pay only the one premium for the policy-and the coverage continues indefinitely, extending even to your heirs for as long as they have any interest in the property.

For your peace of mind, don't settle for less than full protection. Make certain you, too, are protected with an owner's title insurance policy from a reputable carrier.