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Title Insurance in Denver Colorado Explained

Posted on: November 4th, 2016 by , No Comments

title insurance

An Explanation of Title Insurance And Why It’s Important

Title Insurance and three definitions to help make it clear as to what it is and it’s sole function.

  • “insurance protecting the owner or mortgagee of real estate from lawsuits or claims arising from a defective title.” -dictionary.com
  • “Title insurance is a form of indemnity insurance predominantly found in the United States which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans.” –wikipedia.org

Title companies spend the majority of their operating income collecting, storing and analyzing official records for information that affects title to real property. The experts within a title company are trained to identify the rights of others in your property, such as recorded liens, legal actions, disputed interests, rights of way, and other encumbrances on your title.

The best way to explain title insurance is to answer commonly asked questions on the topic.

Is title insurance optional?

Many people think that since it’s protecting against events in the past, title insurance is something they can choose to go without.

It’s a common misconception that a title search will uncover every possible defect in title. Title searches only discover events and documents of public record, so anything done illegally or without proper documentation may not be known until some time in the future.

Lenders do not consider title insurance optional. In fact, nearly all institutional lenders insist on having their own policy separate from the owner’s policy. If it’s important for their partial investment in the property, it is even more important for the homeowner to be protected for the full value of the home.

How is title insurance different from other insurance?

Title insurance protects you against events that occurred before the policy was purchased as long as the title defect was not discovered at the time of the title search. This differ from property, casualty, life and health insurance policies which protect you against events that occur after you purchase the policy.

What is title insurance protecting against?

There are potentially hundreds of ways title to your property can be compromised. Even if you don’t lose your property altogether, certain title defects can make it impossible for you to sell or even give away your property. Here are some of the possible title defects covered by title insurance:

  • Forged deeds, releases, or wills.
  • False impersonation of the true owner of a property.
  • Documents executed under invalid or expired powers of attorney.
  • Misinterpretations of wills, or discovery of a later will after the first will goes through probate.
  • Deed by minors, by someone of unsound mind, or by someone married representing themselves as single.
  • Mistakes in recording, or deeds recorded but improperly indexed and therefore not discovered by a title search.
  • Undisclosed divorce by someone who conveys title of a deceased former spouse.
  • Deed to or from a corporation before incorporation or after loss of a corporate charter.
  • Claims resulting from the use of aliases or fictitious names by someone earlier in the chain of title.
  • Liens for unpaid estate, inheritance, income, or gift taxes.
  • Disputed or fraudulently obtained release of a mortgage document.
  • A misapplied tax payment.
  • Undisclosed heirs who surface years or decades later.

Hopefully this was enough to grasp an understand of title insurance and why you should have it every time. Consult a local title representative to determine the type and cost of coverage available in your area.

If you are selling a house and would like to work with a company who already knows what title insurance is, Adam Buys Houses Company would like to talk more! Give us a call directly at 303-997-2045 or go to click here to sell a Colorado house.

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