What is Title Insurance?
Title Insurance protects you, the owner of property, and insures
that you are the rightful owner of your property, and that there
are no liens or other encumbrances affecting your property that
could result in financial and tangible losses to you. In other
words, nothing exists that could devalue your property by forcing
you to pay for things that should have been paid for by prior
owners, or by limiting your ability to use your property as you
would like.
Primarily there are two types of
title insurance policies. The Owner's Policy is designed for the
owner of property; and the Lender's Policy is designed for mortgage
companies, or banks which lend money where the property is used
as collateral. When a buyer purchases an Owner's policy, the Lender's
policy is included in that fee. The Owner's policy insures that
the owner is the rightful owner of the property and that there
are no liens, judgements, or encumbrances against the property.
The Lender's policy covers the lender for monetary loss that they
may incur if their are any liens, judgements or encumbrances that
interfer with the new mortgage.
How does one obtain title
insurance?
In order to issue title insurance, title companies require that
a title search of the property be performed. Every document that
is created which affects property is presumed to be recorded at
the Recorder of Deeds Office of the Court House in the county
where the property is located. A title search is the collection
of all the documents that are recorded at the Recorder of Deeds
office which affect title to a particular property.
Using the information acquired in the title search, a Commitment
for Title Insurance is prepared. The Commitment is a commitment
to insure a piece of property. It lists all of the mortgages,
liens, taxes and encumbrances that must be taken care of by the
seller prior to transfering the property to buyer.
It is the buyers responsibility
to purchase title insurance. The Title Insurance agency provides
a place for settlement and prepares the deed and other settlement
documents.
How much does title insurance
cost?
Premium rates paid for title insurance are based upon the purchase
price, or loan amount, which will be the amounts insured on the
policies. In Pennsylvania, the rates for title insurance are standard
rates, regulated by the Insurance Department of Pennsylvania.
Rates are filed on an all inclusive system, which means they include
not only the cost of the title insurance premium, but also the
cost of the title search and the closing or settlement fee. We
can provide coverage to you under several different fee arrangements.
What is closing, or settlement?
When you purchase a property, initially you sign an agreement
to purchase the property. This document is called the Agreement
of Sale. Once that is complete, all the inspections, loan application
and approval process, appraisal and all other documentation must
be collected. When that has all been finished, you are ready to
go to settlement on the property. Settlement is the time you sit
down with the sellers of the property and sign all the final documentation
transferring the property to you. It is also the time the sellers
hand you the keys.
When you refinance, initially, you
will apply for your new mortgage. Inspections, appraisal, loan
approval and all other documentation must be collected. When that
is complete you are ready to go to settlement. At settlement you
sign all the final loan documentation for your new loan.
What is the role of the title company at settlement?
The title company coordinates all the documentation that needs
to be signed at closing. They make sure all the required items
shown on the Title Insurance Commitment have been taken care of.
They sit at the table with you and explain to you the documents
you will be signing and answer any questions you may have. They
are also responsible for all the money that exchanges hands between
the buyer, seller and lender and they pay all bills associated
with the transaction.
After settlement is complete the
title company will make sure your new documents are recorded at
the Recorder of Deeds office. After they have been filed, the
original documents will be returned to the title company. The
title company will produce the Title Insurance policies and forward
them to you, or your lender, along with the original recorded
documents.
How do I select a title
company?
For residential property, federal regulations mandate that it
is the buyer's choice who handles their settlement. Because rates
and fees are mostly the same no matter what title company you
select, you should select a title company you feel comfortable
with, a title company you can rest assured will do everything
the right way to protect you.
Recomended
Title Company
Freeland
Abstract
376 East Main Street
Collegeville, PA 19426,
(610) 489 - 3656
Do I need an attorney?
Home Sale Services, Inc.
recommends that if you would like an understanding of the legal
obligations created by the documents that you are signing at settlement,
you should contact an attorney experienced in the field.
See also "Do
I need Representation?"
