Title Insurance Protects Homebuyers Long After Purchase

While an “abstract of title” or “title search and exam” may sound foreign, it’s simply a summary of research activities conducted by an employee of a title agent determining ownership of a property gathered from searching public records. Buying or selling a home requires a search of the public records to properly determine ownership, and most rely on professionals like First National Title Company, the largest independent title agent in Arkansas.

A title search is conducted to determine that the seller owns the property with a “free-and-clear” or “marketable” title, or if not, who else can claim ownership to the home or has a claim or lien against the property that is superior to the ownership interest of the insured. However, even the most thorough search cannot guarantee against hidden problems, or “clouds,” that are not detectable through a search of the public records.

To obtain this “guarantee” an owner’s policy of title insurance is the best method to fully protect a homebuyer if an issue with the title arises that wasn’t found during the title search. This policy is issued in the amount of the real estate purchase price for a one-time fee at closing. An owner’s policy of title insurance lasts for as long as you or your heirs have an interest in the property.

Possible Clouds

1 Fraud and forgery: A forged signature on the deed, which would mean no transfer of ownership to you. Those involved in real estate fraud and forgery can be clever and persistent, which can spell trouble for your home purchase. Fraud and forgery are examples of hidden title hazards that can remain undetected until after a closing despite the most careful precautions. Although emphasizing risk elimination, an Owner’s Policy protects you financially through negotiation by the insurer with third-parties, payment for defending against an attack on the title as insured, and payment of valid claims.

2 Missing or undisclosed heirs: You may purchase a home from a widow and a daughter, the only known heirs of the husband and father who died without leaving a will. After the sale, a man who was the previous owner’s son claimed to be the actual legal heir. The son was, indeed, entitled to a share of the value of the home. With owner title insurance, the new owners are protected against this potentially expensive problem.

3 Other problems: Ownership disputes typically involve errors or omissions in deeds and mistakes in examining records. Again, these mistakes are not typical, but are more likely to occur with less experienced title companies. So be sure to use a company with a great track record.

First National Title Company with offices throughout Central and Northwest Arkansas has some of the most experienced staff in the business, so please call any of our offices at the numbers listed below, or click here for more information. You’ll be glad you contacted First National Title first!