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| Sandy Gadow, a featured guest on CNN's "Open House," and a speaker on national radio as the escrow expert, has more than 25 years experience in escrow, title and real estate. A licensed mortgage broker and real estate sales associate, Sandy is a member of the American Land Title Association, the National Association of Realtors, the California Escrow Association and on the advisory council for the Escrow Career Center. She is the author of The Complete Guide to Your Real Estate Closing and specializes in assisting the American as well as international client. If you have questions for Sandy see our Ask Sandy page.
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What Title Insurance Will Do for You?
Title insurance is a one-time premium paid to a title company that
guarantees that you own a particular piece of property and guarantees that no
one else has a claim to that property. You can't tell by looking at a
property or at the deed whether the title to that property is good, and no
one will require you to obtain title insurance, unless you are obtaining a
mortgage. Title insurance works the opposite of your health or home
insurance, which pays for loss or injury occurring after the effective date.
Title insurance pays for events which occurred before the policy's effective
date. It is the best protection you can have against any claims that may
arise out of the past.
You may wonder what can go wrong once you have a deed to the property
in hand. The deed is recorded at the County Recorder's office, everything
looks official, and an examination of the property shows no visible signs of
encroachment or problems. You have walked the property, verified the survey,
and see no boundary disputes. You could even go through the county records,
if you wanted to do so, and check for any possible problems. Do you still
need title insurance? Yes, you need title insurance for several reasons.
There are matters that could have occurred in the past, such as a
forgery, or a signature by an incompetent person, clerical errors, incorrect
marital status, undisclosed heirs, improper interpretation of wills, signing
by anyone without authority, a minor's signing, or any possible claims made
by third parties against the title, all of which could make title to the
property unmarketable. Title insurance will also cover losses or damages you
suffer if there is no access to the land. Even if you searched all the
county records yourself, you would still have to be able to interpret the
effects of such information on ownership. Overlooking just one judgment or
lien could be very costly.
Imagine that you have purchased a property which has an adjoining
parking lot. Half of the parking spaces are on the property which you own,
which is described in your deed, and the other half of the parking spaces are
a joint easement, shared with your neighbor. Let's imagine that a city
ordinance requires you to have a certain amount of parking spaces to provide
for your tenants. You have enough parking spaces with the half you own and
the half which you share with your neighbor. Let's imagine that you neighbor
suddenly, after several years, brings to your attention that he really owns
part of the parking easement, and this property is included in his deed. You
are now in jeopardy of loosing your occupancy permit on your property, as you
could not provide the required parking spaces. You realize there must have
been an error made in the boundary description of the easement. Where would
you turn for help? The first place to turn is to your title company.
When you purchased the property, you had a recorded easement for
parking purposes. The title company will be responsible to investigate and
negotiate with your neighbor to resolve the problem. In this particular
case, the title company offered to buy the additional parking spaces from the
neighbor, adding that land onto your deed. They had made an error in the
description of the shared easement. The purchase of the parking spaces
alone well exceeded the price of the title insurance premium.
Title insurance is protection that you can't afford not to have. The
chances are that you will never have to file a claim, but in the event that
you do, you will be glad that you have this valuable insurance. The cost of
title insurance is minimal when you consider the protection it provides.
Copyright © 1999
Sandy Gadow. This column may not be resold,
reprinted, resyndicated or redistributed without the written
permission from Escrow Publishing Company.
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