Page 14 - Montana Cascade Buyer's Guide
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What is TITLE INSURANCE and Why is it Needed?
WHAT IS TITLE INSURANCE? WHAT TITLE INSURANCE PROTECTS AGAINST?
Your lender must insure that the quality of the Here are just a few of the most common hidden
title to the property you are about to buy, and risks that can cause a loss of Title or create an
which you will pledge as security for the loan, is encumbrance on Title:
satisfactory. The lender does this by obtaining a
lender’s policy of title insurance, often referred • False impersonation of the true owner of the
to as the ALTA lenders title policy. property
The lender’s title policy protects the lender • Forged deeds, releases of wills
against loss due to unknown Title defects at • Undisclosed or missing heirs
the time of closing and in the future. This policy • Mistakes in recording legal documents
only protects the lender’s interest. It does not • Deeds by persons of unsound mind
protect you. That’s why you need an owner’s • Deeds by minors
title policy, which will be issued at the same • Deeds by persons supposedly single, but in fact
time as the lender’s policy for a one-time fee.
married
HOW CAN THERE BE A TITLE DEFECT IF THE • Liens for unpaid inheritance, income of gift taxes
TITLE HAS BEEN SEARCHED AND A LOAN • Fraud
POLICY ISSUED?
WHAT PROTECTION DOES TITLE INSURANCE
Title insurance is issued after a careful exam- PROVIDE AGAINST DEFECTS AND HIDDEN RISKS?
ination of copies of the public records. Even the
most thorough search cannot absolutely assure Title insurance will pay for defending against law-
that no Title hazards are present, despite the suits attacking your Title as insured, and will clear
knowledge and experience of professional Ti- up Title problems or pay the losses. By combining
tle examiners. In addition to matters shown by expertise in risk elimination at the time of issuing a
public records, other Title problems may exist policy, and protection against hidden risks as long
that cannot be disclosed in a search. as the policy remains in effect, your Title insurance
protects against title loss.
Never buy a home without your Owner’sTitle Policy!
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