Q1. What is title insurance?
Title Insurance protects against the risks involved in every real estate transaction. It is an insurance policy that protects the insured against loss, should the condition of the land be other than as insured.
Unlike other types of insurance that offer protection against future possible occurrences, Title Insurance offers protection against past occurrences which could result in a claim at a future date.
Title Insurances provides the insured with "peace of mind" in knowing that you are receiving a good and marketable title to the real estate you are purchasing.
Q2. Why do I need title insurance?
When you purchase your home, how can you be sure that there are no problems with the home's title and that the seller really owns the property? Problems with the title can limit your use and enjoyment of the property, as well as bring financial loss. You expect to enjoy certain benefits from ownership... to be able to occupy and use the property as you wish; to be free from debts or obligations not created or agreed to by you; and to be able to freely sell or pledge your property as security for a loan. Title Insurance is designed to cover these rights.
Without an Owner's Title Insurance Policy, you may not be fully protected against errors in the public records, hidden defects not disclosed by the public records, or mistakes made during the examination of the title of your new property. As a result, you may be held fully accountable for any liens, judgements or claims brought against your new property. However, your Owner's Title Policy insures that if such an occasion arises, you will be defended, free of charge against all covered claims and paid up to the amount of the policy to settle valid claims.
Q3. What is an owner's title policy?
An Owner's Policy provides assurance that your title company will stand behind you --monetarily and with legal defense if needed -- if a covered title problem arises after you buy your home. The bottom line is that your title company will be there to help pay valid claims and cover the costs of defending an attack on your title.
Sometimes title problems occur that could not be found in the public records or are inadvertently missed in the title search process. To help protect you in these events, it is recommended that you obtain an Owner's Policy of Title Insurance to insure you against most unforeseen problems. It is a one-time fee, paid at closing, and protects you for as long as you or your heirs have an interest in the property.
Q4. What is a loan policy?
Lender's Title Insurance, also called a Loan Policy, is usually required by most lenders when they issue you a loan. The Loan Policy is based on the dollar amount of your loan. It only protects the Lender's interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off.
Q5. What is a title search?
A title search is a thorough review or examination of the public records that pertain to real property ownership and the rights/limitations of it's use. The search period beings with the current owner(s) and extends back in time for a period of 60 years (commonly referred to as the "chain of title"). All documents affecting the subject property are reviewed for accuracy, completeness and proper execution. Similarly, all owners of record during the search are indexed to determine their ownership interests, marital status and legal and mental capacity to enter into a contract to sell/but real property. All conveyances must have been properly conducted and approved by the appropriate governmental departments.
Q6. What issues can a title search reveal?
A title search can show any number of title defects, liens, and other encumbrances and restrictions. Among these are unpaid taxes, unsatisfied mortgages, judgements against buyers/sellers and any restrictions or conditions limiting the use of the land.
Q7. What issues a title search may not reveal?
There are some "hidden hazards" that even the most diligent title search may not reveal. For instance, a previous owner could have incorrectly stated his marital status resulting in a possible claim by his legal spouse. Other hidden hazards include fraud, forgery, defective deeds, mental incompetence, confusion due to similar or identical names, and clerical errors in the City/County land records.
These defects can arise after you have purchased your home and can jeopardize your right to ownership in part or full.
Q8. I'm refinancing. Why dod I need title insurance?
When you refinance, you are obtaining a new loan, even if you stay with your original lender. Your lender will usually require a new Title Search and Loan Policy to protect their investment in the property. You will not need to purchase a new Owner's Policy -- the one you bought at closing us good for as long as you or your heirs have an interest in the property.
Even if you recently purchased or refinanced your home, there are some problems that could arise with the title. For instance, you might incurred a mechanic's lien from a contractor who claims he/she has not been paid. Or you might have a judgement placed on your house due to unpaid taxes, homeowner dues, or child support. The lender needs reassurance that the title to the property they are financing is clear.
Ask if you qualify for a "refinance" rate, sometimes called a "reissue" rate. These rates are not available in every state, and you might have to meet some criteria to be eligible, so be sure to ask.
Q9. I'm buying a newly built home. Do I need title insurance?
Construction of a new home raises special title problems for the lender and owner. You may think you are the first owner when constructing a home on a purchased lot. However, there were most likely many prior owners of the unimproved land. A title search will uncover any existing liens and a survey will determine the boundaries of the property being purchased. In addition, a builder may be failed to pay subcontractors and suppliers. This could result in the subcontractor or supplier placing a lien on your property.
Purchasing an Owner's Policy will protect you against these potential problems and pay for any legal fees involved in defending the claim.
Q10. What does title insurance cost?
The cost of Title Insurance is variable, and depends mainly on the value of your property. It is important to remember that it is a one time cost, and that coverage remains for as long as you or your heirs have an interest in the property. If you die, coverage automatically continues for the benefit of your heirs.
Q11. Does a title insurance policy insure oil mineral and/or gas rights?
No. Title Insurace does not ensure buyer receive rights to oil, minerals and/or gas on or under their property. Only "real property" is insured. This is described in Section A, or the Legal Description of a Title Insurance policy, and is considered to be only the land described and affixed improvements that, by law, constitute real property.
Q12. Why are oil, mineral, and gas rights not insuranced?
In a purchase transaction, records relating to a property and it's owners are only searched back as far as 60 years. However, the first active coal mines began in the late 1700s - and more than 350,000 oil and gas wells have been drilled since then. In that time, complete records were scarecly kept. When records were maintaied, the method for doing do varied from county to county making it extraordinarily difficult to accurately research today. The most reliable source to accurately determine whether a property has been subject to leasing, one must contact the Pennsylvania Department of Mining - a time consuming and costly procedure that still may not provide completely accurate information. For this reason, insurance underwriting guidelines generally require that Oil, Mineral and Gas rights are excepted from coverage.
Q13. How common are natural gas wells in Pennsylvania?
According to DEP data, only 48 Active Permitted Natural Gas Wells were in existance in Pennsylvania in July 2008. That number has exploded to an astounding 2,015 as of Janurary 2012.
Q14. What are endorsements?
Endoresements to a title insurance policy are addenda or attachments to the policy that:
- May correct or modify a previously issed title policy, or
- alter or modify the provisions of the exceptions, conditions and stipulations of the title policy so that the insured party receives greater coverage than would exist under the terms of the unendorsed title policy.
Endorsements create a greater liability for the title insurance underwriter, and therefore most endorsements require an additional charge to be collected in excess of the usual title insurance premium.
In accordance with the Rate Manual adopted by the Title Insurance Rating Bureau of Pennsylvania and approved by the Pennsylvania Insurance Department, the charges for endorsements shall be made each time an endorsement is attached to a policy regardless of the number of policies issued in a particular transaction.
Q15. What is TIRBOP - ENDORSEMENT PA 100?
TIRBOP - ENDORSEMENT PA 100 - WHERE THERE HAS BEEN NO APPARENT VIOLATION OF RESTRICTIONS BY EXISTING CONSTRUCTION
Applies to LOAN POLICY only
This endorsement insures that the restrictions have not been violated and that a future violation thereof will not cause a forfeiture or reversion of title.
Q16. What is TIRBOP - ENDORSEMENT PA 300 - Survey Exception?
TIRBOP - ENDORSEMENT PA 300 - SURVEY EXCEPTION
Applies to LOAN POLICY only.
This endorsement has the effect of insuring without exception for matters discoverable by survey (except as might be specifically noted) and will further insure against loss or damage by reason of encroachment (other than by party walls), whether by the building on the mortgaged premises encroaching upon adjacent property, or by any building on adjacent property encroaching on the mortgaged premises.
Q17. What is TIRBOP - ENDORSEMENT PA 900 (ALTA ENDORSEMENT 8.1)?
TIRBOP - ENDORSEMENT PA 900 (ALTA ENDORSEMENT 8.1) - ENVIRONMENTAL PROTECTION LIEN ENDORSEMENT
Applies to LOAN POLICLY only; and primarily affects Residential Property
This endorsement provides coverage to the lender by insuring the lein property of he insured mortgage over those environment protection liens recorded in the land records except with respect to environmental protection liens provided for by certain statutes identified in the endorsement.
Q18. What is TIRBOP - ENDORSEMENT PA 1030 (ALTA ENDORSEMENT 9)?
TIRBOP - ENDORSEMENT PA 1030 (ALTA ENDORSEMENT 9) - SPECIAL RISKS (RESTRICTIONS, ENCROACHMENTS, MINERALS)
Applies to LOAN POLICY only.
This endorsement offers the lender a variety of additional affirmative coverages including, but not limited to, insurance that there are no covenants, conditions or restrictions under which the lien of the mortgage can be divested, subordinated or extinguised, or its validity, priority, or enforcability impared; insurance agaisnt present violations of covenants, conditions or restrictions, and insurance against encroachments and against damage to existing improvements which encroach upon easement areas or damage resulting fro the right to use the surface of the land for the extraction of minerals.
Q19. What is TIRBOP - ENDORSEMENT 101 - WHERE RESTRICTIONS APPEAR TO BE VIOLATED BY EXISTING CONSTRUCTION?
What is TIRBOP - ENDORSEMENT 101 - WHERE RESTRICTIONS APPEAR TO BE VIOLATED BY EXISTING CONSTRUCTION?
Applies to Loan and/or Owner's Policies
This endorsement insures against loss or damage (loss of income or profit excluded) occasioned by the enforcemnt or attempted enforcement of said restrictions to remove the whole or any portion of the improvements now on the premises and/or to collect money damages in lieu thereof.
Q20. What is TIRBOP - ENDORSEMENT 102 - WHERE PROPOSED NEW CONSTRUCTION DOES NOT INDICATE THAT RESTRICTIONS WILL BE VIOLATED?
What is TIRBOP - ENDORSEMENT 102 - WHERE PROPOSED NEW CONSTRUCTION DOES NOT INDICATE THAT RESTRICTIONS WILL BE VIOLATED?
Applies to Loan and/or Owner's Policies
This endorsement insures that existing and/or presently contemplated construction on the described real estate will not violate the covenants, conditions and restrictions referred to in the Schedule "B" of the title insurance policy.
Q21. What is TIRBOP - ENDORSEMENT 103 - WHERE PROPOSED CONSTRUCTION WILL APPARENTLY VIOLATE RESTRICTIONS?
What is TIRBOP - ENDORSEMENT 103 - WHERE PROPOSED CONSTRUCTION WILL APPARENTLY VIOLATE RESTRICTIONS
Applies to Loan and/or Owner's Policies
This endorsement insures that the proposed new construction completed in strict accordance with plans and specifications filed with the Insurer will not violate the restricions set forth in Schedule "B" of the policy, except to the extent set out on the endorsement. Thereafter, the policy will insure against loss or damage (loss of income or profit excluded) occasioned by the enforcement or attempted enforcement of said restrictions to require the removal of the whole or any portion of the improvements, then on the premises or proposed to be constructed in accordance with the said plans and specifications and/or collect money damages in lieu thereof.
Q22. What is Endorsement 104 - WHERE THERE IS NO APPARENT VIOLATION OF RESTRICTIONS BY EXISTING CONSTRUCTION?
What is TIRBOP - Endorsement 104 - WHERE THERE IS NO APPARENT VIOLATION OF RESTRICTIONS BY EXISTING CONSTRUCTION
Applies to OWNER'S POLICY only.
This endorsement offers the same coverage to an owner or lessee as TIRBOP Endorsement 100 offers to a mortgage.
Q23. What is ENDORSEMENT PA 301 - SURVEY EXCEPTION?
TIRBOP - ENDORSEMENT PA 301 - SURVEY EXCEPTION
Applies to OWNER'S POLICY only.
This endorsement offers the same coverage to an owner or lessee as TIRBOP Endorsement PA 300 offers to a mortgagee.