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How Does Title Insurance Work?
The title is your right to own or use your property. The title also establishes any limitations on those rights.
Once your offer on a home or other real estate property has been accepted by the seller, your transaction is placed into escrow. An escrow is an arrangement in which a neutral third-party, called an Escrow Holder, holds legal documents and funds on behalf of a buyer and seller and facilitates the transaction by managing the disbursement of these legal documents and disbursement of funds according to the Buyer’s, Seller’s, and Lender’s instructions.
People buying and selling real estate often open an escrow for their protection and convenience. The Buyer can instruct the Escrow Officer to disburse the purchase price only upon the satisfaction of certain prerequisites and conditions. The Seller can request to retain possession of the deed to the buyer until the seller’s requirements, including receipt of the purchase price, are met. Both rely on the Escrow Officer to carry out faithfully their mutually consistent instructions relating to the transaction and to advise them if any of their instructions are not mutually consistent or cannot be carried out.
To put it simply, title insurance is a way to protect yourself from financial loss and related legal expenses in the event there is a defect in title to your property that is covered by the policy. Title insurance differs from other types of insurance in that it focuses on risk prevention, rather than risk assumption. With title insurance, title examiners review the history of your property and seek to eliminate title issues before the purchase occurs. Title insurance also differs in that it comes with no monthly payment. It’s just a one-time premium paid at closing.
The one-time premium that you’ll pay for a title insurance policy varies by state but generally is related to the value of your property. You can use our Rate Calculator to estimate how much your title insurance policy may cost. Your owner's title insurance policy lasts for as long as you or your heirs own your property. Your life will change over time, but your peace of mind never will.
Sometimes undiscovered defects can come up after the title search. Under an owner's title insurance policy, you are protected against certain undiscovered errors in the title.
Title issues include unknown:
- Outstanding mortgages and judgments, or a lien against the property because the seller has not paid taxes
- Pending legal action against the property that could affect you
- Unknown heir of a previous owner who is claiming ownership of the property
Unforeseeable title claims include:
- Forgery: making a false document
- For example, the seller misrepresents the identity of the person who sold the property.
- Fraud: deception to achieve unfair gain
- For example, someone steals your identity and either sells your house without your knowledge or consent, or takes out a second mortgage on the property and walks away with the money.
- Clerical error: inconsistent paperwork and historical records
- For example, an unforeseeable discrepancy in the property or fence line can cause confusion in ownership rights.
A Lender’s Policy provides no coverage to the homeowner. A Lender’s Policy insures that your lender has a valid, enforceable lien on your property. Most lenders require borrowers to purchase this type of insurance policy to protect their investment.
An Owner’s Title Policy is designed to protect you from covered title defects that existed prior to the issue date of your policy. If a valid claim is filed, your Owner’s Policy, subject to its terms and conditions, will cover the financial loss up to the face amount of your policy.
Closing is the final step in executing the home buying transaction. Once our staff reviews your policy and completes a property search you will be able to schedule your closing date. It is the process that allows the transfer of ownership to occur. Upon completion of the closing process, you get the keys to your home!
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Address: 300 Fleet Street #105, Pittsburgh, PA 15220