Why You Need Title Insurance?

When you obtain a mortgage for the purchase or refinance of real estate, the property is pledged as security for the loan. To protect against risk, the lender requires assurance that the title to the property is clear, and this is done by requiring the borrower to purchase a loan policy of title insurance.

At the time of the initial purchase of the property, the issuance of an owner's policy of title insurance protects the purchaser against loss or damage due to title defects.

Title insurance is only issued after a thorough and complete search of the title and all liens that may affect ownership of the property.

The price for the title insurance is regulated by the Pennsylvania Department of Insurance and includes the settlement in the title office. The cost is based on the price of the home for purchases and the amount of the new mortgage for refinances.

There is a reissue discount to the title insurance if the property was transferred within 10 years and further discounts if the property was insured within four years. All title policies are issued through Stewart Title Guaranty Company, a national title insurer.

What does Title Insurance Protect Against?

• Mistakes in recording of legal documents.
• Forged deeds, releases or wills.
• Undisclosed or missing heirs or spouses.
• Deeds by persons of unsound mind.
• Deeds by minor.
• Deeds executed under invalid or expired Powers of Attorney.
• Liens for unpaid taxes.

The Role of Title Agent in Real Estate Closings

In Pennsylvania and South Jersey areas, the title insurance company conducts the real estate closing. The duties of the title company normally include:

• Preparing the settlement (HUD) sheet and advising the borrower of the closing costs.
• Preparing the deed and other documents of conveyance.
• Obtaining the funds and closing documents from the mortgage lender.
• Disbursing all payoffs for mortgages, taxes and other liens being paid at closing.
• After closing, preparing the final lender and owner's policy, if applicable.