Title Insurance: Facts and Clarity

Purchasing a home or property is a huge investment. Many of us save for years and work at building our credit to afford the transaction. After it’s all said and done, we hope to live in our new home and don’t think twice about what happened to the property before we lived there. How do we know what we are buying is actually what the seller is telling us? Who is looking out for our best interests during the transaction? How are we protected during the purchase? It begins with title insurance at Prairie Land Title Company.

When a property is bought or sold, a record of that transaction gets filed in public archives. The documents include other events that may affect the ownership of a property, such as liens or levies.

Can you imagine living in your new home and having the seller’s distant cousin show up at your door staking claim to your property? Or getting an unpaid tax bill in the mail for the property - only to find out you are responsible for paying it? Imagine this all happening ten years into owning the home. What a nightmare! 

Those situations may sound like something from a movie, but they are real situations! Have no fear. At Prairie Land Title Company, we’ve got your back. Title insurance protects you from problems with an ownership title when you buy real estate. These may be problems that existed before the purchase. Unpaid property taxes, fraud or forgery, and a spouse or unknown heir who claims they own the property are a few examples.

When you buy title insurance for your property, we search these records to find any types of ownership issues. First, we search public records to determine the property’s ownership status. After this search, the underwriter will determine the insurability of the title.

Keep in mind, even the most skilled title professionals may not find all problems associated with a property. A few risks you can run into are filing errors, forgeries, undisclosed heirs. Once we finish our search, we provide a title insurance policy to help protect you from various issues that may be uncovered later.

Here are some facts about title insurance:

• Most people confuse this with homeowners insurance! A title policy doesn’t protect you against physical damages to the property.

• Title insurance protects your ownership of the property. It protects from any previous debts or other claims of ownership prior to you owning the property. 

• You pay the premium one time when you close on the sale.

• There are two kinds of title policies:

Owners Policy: Protects the homeowner; it’s good for as long as you or your heirs own the property

Loan Policy: Protects the right of the lender. It’s good until the loan is paid off.

• The policy is standard.

• The rates are set.

• Title companies are independent. They don’t represent the buyer or the seller in the real estate transaction. Your real estate agent may recommend you to a title company they trust. 

Keep in mind, when you purchase real estate, it is a significant financial investment. However, title insurance is a way to have peace of mind!

5 Things To Know About Title Insurance

Whether you are a first-time homebuyer or long-time property owner, you should be insuring your title. We all know this. By now, you may have done some research into insurance coverage for your property. After all, you keep hearing how important title insurance is. However, there are probably still a few things you have questions about in your search. More often than not, you keep coming back to the burning questions: just what is title insurance, and why do I need it? We at Prairie Land Title want to shed more light on title insurance and key things you should know about it.

Title insurance protects you from potential problems with an ownership title once you buy real estate. These may be problems that existed before the purchase. Unpaid property taxes, fraud or forgery, and a spouse or unknown heir who claims they own the property are a few examples.

1. Title Insurance helps ensure that Ownership Rights are protected. During the search and underwriting - defects, liens, and encumbrances - which the title company can detect could affect your ownership interest in the property. An Owner’s policy is often confused with a homeowner’s insurance policy. A homeowner’s insurance policy protects the owner from future occurrences such as fire, flood, accidents, etc. An Owner’s policy protects against events that have happened in the past that could impact who has rights to the land.

2. When a lender is loaning funds for the purchase, two different policies will be issued. When a loan is involved, the lender will require that a Lender’s policy be issued, which protects their lien against the property.

3. Prairie Land Title will try to resolve any issues before closing to protect the buyer’s interest in the real estate. We use the public records to find and cure, if possible, issues from the past that can affect the new owner’s interest in the property. Your Owner’s policy protects you if liens are not disclosed by the title examination that is not reported on your policy.

4. The Owner’s policy issued is a one-time fee. The premium is usually paid at closing by the seller. The new owner is covered under this policy as long as they or their heirs own the land. The Lender’s policy is only valid until the loan is completely paid off or refinanced. Regardless of the lender, if there is a new mortgage signed, then there will be a new Lender’s policy issued.

5. The seller typically chooses the title company. Title companies are independent in the sale of a property. Your real estate agent will be able to recommend a company that is trustworthy to you. Real estate agents do business with title companies throughout the year and will put you in touch with the best!

Our goal at Prairie Land Title is to ensure you are protected during and after the sale or purchase of a home. We can’t stress enough the importance of title insurance and how it can protect your future!

Illinois Tenancy 101

My husband and I are looking to buy a home in Central Illinois. When we met, he moved into the house I owned and we lived there for many years. What happens if one of us dies - will the other one automatically get the house? What is the best way to protect ourselves for the future?

Shopping for a new home can be a wild adventure on its own - there is so much to take into consideration as you look. You also want to consider the future protection of one of the largest assets you will own - especially if purchasing it involves a spouse

In Illinois, titles can be taken as Joint Tenants with the Right of Survivorship, Tenants in Common, or Tenants by the Entirety. We always recommend consulting an attorney about your specific situation. What we can offer you is a basic understanding of your choices. 

Joint Tenants with the Right of Survivorship

This is the most common way to take a tenancy. Each person owns a share. If one person dies, the title transfers to the survivor without the need for probate. 

Tenants in Common

This is where each person owns a share of the property. It can be a full 50%-50% split, or it can be something like 25%-75%. If one person dies, the decedent’s interest passes to their heirs. The estate will either have to be probated to name an Executor or all heirs will have to deed it out. 

Tenants by the Entirety

This is like Joint Tenancy. It provides more protection to a married couple. It has all the benefits of joint tenancy. In the event of death, the surviving spouse takes the title. Tenants by the Entirety also includes the extra benefit of protecting the property from creditors. In a situation of debt - the property may not be partitioned, sold, or encumbered without the permission of both spouses. Neither spouse may convey their half interest without the consent of the other. In Illinois, if the couple divorces, the property will be considered tenants in common.

 
Due to the extra protection, Tenants by the Entirety has specific requirements. To take the title as Tenants by Entirety, you must be a married couple. The property on the title must be your primary personal residence. Both parties must agree if the tenancy is changed at a later date. Finally, the deed is worded in a way to state the owners are married, not tenants in common or as joint tenants but as tenants by the entirety.

Families and partnerships change over time. Consulting an attorney about tenancy will keep you protected against all eventualities. That may seem like an extra step during the home buying process, but protecting your future is most important.

Steps in the Title Process

You've spent quite a bit of time building up your credit and saving to buy a home. Your dream home. Owning your dream home is something you've worked hard and made sacrifices to achieve. Buying a home is such a huge transaction, you've found a trustworthy real estate agent to help. The agent has explained the transaction process involves a title company. But what happens during that process? As a buyer - what happens to be sure your purchase is successful? It's important to know that a title company operates independently in a real estate transaction. 

Here are eight steps a title company takes to ensure your transaction is a success:

Steps in the Title Process

Initial Request Submitted

Your agent submits the contract on your behalf and the initial order to get our process started. 

Preliminary Report is Built

A researcher on our team begins to research the history of the real estate title. They collect information about any previous ownership, liens, encumbrances, etc. This initial research includes documents filed with the Recorder of Deeds, Circuit Court, County Assessor, and Collector of Revenue. The researcher compiles a preliminary report.

Technical review

The preliminary report gets reviewed, and the research continues! A more technical analysis begins of the documents on record for the property. Interpretation of all recorded matters helps check their impact on the title to the property. This analysis reveals anything that could affect your ownership rights.

Preparation for Title Insurance Commitment

The chain of the title gets reviewed to prepare a Title Insurance Commitment. The Title Insurance Commitment will show the current ownership and legal description of the property. It will also show anything that is an exception to the title insurance coverage. The Title Commitment gets prepared and distributed to all parties. 

Processing

The closing processor receives the title commitment. The processor begins gathering and organizing information for the closing. 

Prep for Closing

Our Closing Agent reviews the contract. Then, the agent processes the package, the title commitment, and closing instructions. This process helps to prepare for settlement and closing. Congratulations, you've made it to closing! 

Document submission 

After closing, the work continues! The recording clerk sends the appropriate documents to the Recorder of Deeds office. After they get sent to the recorder, they are recorded in the county records, and then the deed is mailed to you. 

Policy Prep

The Policy Examiner prepares the title insurance policy according to the closing instructions. 

A title company's work will ensure that no issues crop up with you owning the home down the road. You can rest easy knowing that your dream property is now yours and protected!