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!

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!