Title and Hazard Insurance. Covering your assets.
Of course there are many types of insurance and we primarily discuss homeowners/hazard insurance and title insurance during a real estate transaction. Both of these types of insurance should be addressed in the Residential Sale Contract.
The contract provides that the purchase is conditioned upon the buyer’s ability to obtain homeowner/hazard insurance for the property. Typically the buyer has 10 days (or more if requested) to provide evidence that buyer is unable to obtain insurance. If the buyer is unable to obtain insurance then there is a provision to terminate the purchase contract at buyer’s option. A buyer should consult a trusted insurance provider or legal council for information regarding insurance policies and coverage’s.
Title Insurance will protect the buyer from financial loss in the event that problems develop regarding the rights to ownership of the buyer’s property. Before title insurance is issued, the title insurer performs a search on the title to determine whether any defects occurred in prior conveyances and transfers. Through the search and examination process, title problems are disclosed so they can be corrected whenever possible. However, even the most careful search process cannot locate all hidden title hazards. In the unfortunate event that title defects are found after the search process, the title insurance policy will cover and protect the buyer from financial loss. Claims against a property can be in made in over 70 forms and some examples are; Mistakes in deeds, wills, and trusts; Forgeries in the chain of title; Outstanding mortgages and judgments, or a lien against the property because the seller has not paid their taxes; Easements that allow construction of a road or utility line; Pending legal action against the property that could affect a purchaser; A claim by a previous undisclosed relative of a former owner.
Title insurance is typically issued and paid for at the time title passes. There are no ongoing premiums for title insurance.