What is Title Insurance…
Unlike casualty insurance (auto, fire, or health insurance, for example) which protects against future events, title insurance protects against losses arising from unknown or undisclosed defects in the past chain of title.
Unlike casualty premiums, which are paid in continual installments (hence a lapse in payment may mean a lapse or cancellation in coverage), a title insurance premium is a one-time flat fee regulated by the Division of Insurance and paid at the time of closing. For this one-time premium, an owner’s title insurance policy remains in effect as long as the insured or the insured’s heirs retain an interest in the property or have any obligations to warrant the property when they sell it.
Remember that a title insurance policy does not ensure that title problems will not occur, but it does protect you from loss resulting from title defects which threaten your ownership up to the policy amount. Title insurance is like a pre-paid legal agreement; it pays legal fees involved with defending your rights. Although title losses occur infrequently, they can be very expensive and time-consuming when you are not properly insured.
Our Title Insurance Story: We had purchased an older home in Vincennes, IN. When we purchased the home, we bought a title insurance policy. When we sold the property, the title company found out that there was a “Clean-up Lien” that was recorded on the property nine days before we closed on it. We contacted the title company that carried the title insurance and they paid for the lien.
Below is an example of Title Condition/Problems that a Title Company will cover.
Administration of estate and probate of wills of persons absent but not deceased, or a missing person presumed deceased.
Birth or adoption of children after date of will.
Break in chain of title beyond period of examination or public record where running of adverse possession statute has been suspended.
Children not mentioned therein.
Claims by creditors of decedent against property improperly conveyed by heirs and devises.
Community property issues
Conveyances and proceedings affecting right of servicemen protected by the Soldiers and Sailors Civil Relief Act.
Conveyances by an heir, devisee or survivor of a joint estate who attempts to attain title by ill gotten means.
Conveyances by undisclosed divorced spouses.
Conveyances in violation of law (payment of gambling debt, payment for commission of a crime, conveyance made in restraint of trade.)
Corporation franchise taxes as lien on corporate assets (notice does not have to be recorded in the recording office).
Deed from bigamous couple
Deed from Trustee of purported business trust which is in fact a partnership or joint stock association.
Deed in lieu of foreclosure set aside as being given under duress.
Deed of executor under non-intervention will when order of solvency has been fraudulently procured or entered.
Deed or property recited to be separate property of grantor which is in fact community or joint property.
Deeds and wills by persons lacking legal capacity.
Deeds apparently valid but actually delivered after death of grantor or grantee, or without consent of grantor.
Deeds by minors.
Deeds by persons falsely representing their marital status.
Deeds by persons of unsound mind.
Deeds from nonexistent entities.
Deeds not properly delivered.
Deeds of fictitious parties
Deeds to or from corporations before incorporation or after surrender or forfeiture of charter.
Deeds which appear absolute, but which are held to be equitable mortgages.
Deeds/Mortgages by foreigners who may lack legal capacity to hold title
Defective acknowledgment before notary start date, or after the notary’s expiration date.
Demolition and substandard building liens.
Descriptions not adequate.
Discovery of later will after probate of first will.
Discovery of will of apparent intestate.
Documents executed under false, revoked or expired powers of attorney.
Duress in execution of instruments.
Erroneous reports furnished by tax officials, but not binding on municipality.
Errors in tax records. (For example, listing payment against wrong property.)
Expired powers of attorney
Failure to include necessary parties in judicial proceedings.
False affidavits of death or heirship.
False impersonation of the property owner
False powers of attorney
Falsification of affidavits or heirship
Federal condemnation (Federal law does not require filing of notice of taking in local recording office.)
Federal estate and gift tax liens.
Forfeitures of property due to criminal acts
Forged deeds, mortgages, wills, releases of mortgages and other instruments.
Gaps in the chain of title.
Homestead exemptions set aside as fraudulently claimed.
Improper marital status
Improper modification of documents
Improperly recorded documents
Inadequate legal descriptions
Ineffective waiver of tax liens by tax or other governing authorities repudiated later by successors.
Instrument which appears to be a deeds, but is actually a mortgage.
Instruments executed under fabricated or expired power of attorney (death).
Interests arising by deeds to fictitious characters to conceal illegal activities on the premises.
Issues concerning adoption of children.
Issues concerning interests noted in financial statements filed under Uniform Commercial Code.
Issues concerning the rightful conveyances by corporate entities.
Issues concerning unlawful takings by eminent domain or condemnation.
Issues involving delivery of instruments.
Issues involving improper marital status.
Issues of rightful possession of the land.
Lack of capacity of foreign personal representatives and trustees to act.
Lack of jurisdiction or competency of persons in judicial proceedings.
Legal capacity of foreign personal representatives and trustees.
Matters regarding probate
Misinterpretation of wills, deeds, and other legal documents
Mistakes due to improper title abstracting
Mistakes in recording legal documents. (incorrect indexing, errors in transcribing, failure to preserve original instrument.)
Outstanding prescriptive rights not of record and not disclosed by survey.
Persons under duress
Prescriptive rights in another not appearing of record and not disclosed by survey
Record easement, but erroneous ancient location of pipe or sewer line which does not follow route of granted easements.
Rightful conveyances by corporate entities
Rights of divorced parties.
Special assessments (after passage of resolution, but before they are recorded, or before improvements occur).
State inheritance and gift tax liens.
True owners are incompetent, absent or incarcerated or title is held by the sovereign.
Ultra vires deed given under falsified corporate resolution.
Undisclosed divorce of spouse who conveys as sole heir of deceased consort.
Unrecorded land contract where the purchaser has taken possession of premises.
Want of jurisdiction of persons in judicial proceedings.