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Title Producer Insurance: Title Insurance – Qs & As
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Title Producer Insurance: Title Insurance – Qs & As
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Title Producer Insurance: Title Insurance – Qs & AsWhy Title Insurance? Right Ans - In its simplest
context, it provides coverage for a lender and/or an owner against title
defects or unmarketable title.
Title insurance is an extremely specialized form of protection. One of the
reasons title insurance is needed is because the recording system is not
perfect. Recording is the actual act of submitting a document to the recorder
to be placed in the public records. In most jurisdictions, land instruments are
recorded in the jurisdiction or county where the property is located. The
recording becomes a part of public records and serves as constructive notice
of ownership or interest in property. The instrument is then indexed by the
grantor (transferor) and the grantee (transferee).
Under this system, determining who owns the title requires the examination
of the land records office. This is done by hiring an abstractor or an attorney
to do a title search of the documents affecting the land and the person. The
abstractor will check for defects in title by examining title public records
including deeds, mortgages, wills, divorce decrees, court judgments, tax
records, liens, encumbrances, bail bonds and maps.
The title search determines who owns a property, what outstanding debts
are against it and the condition of the title. The insured will receive the
results of the search, which describes the title of the property. The report
will be in the form of an abstract/title report.
Examples of Common Title Defects in Maryland: Right Ans - • Lost, forged,
or incorrectly filed deeds - Deeds are the documents that
show who owns the property, and if not filed correctly, can lead to
unclear ownership rights. This can include titles filed in the wrong
name or titles never filed at all.
• Fraud - This can take many forms such as falsified documents making
it appear as if the mortgage is paid off.
• Mechanic's liens, tax liens and association fees - Unpaid contractors,
homeowner association dues or property taxes can result in liens on
the property.
• Encroachments - Physical structures, such as a neighbor's fence, that
, intrudes on the legal property boundary can create title issues at
closing.
Errors Searching Public Records Right Ans - Other types of property
records, such as probate rolls for deceased persons
or judgments and lawsuits may be found in the county's probate court or
clerk of court offices. Tax information is generally found in the tax assessor
and treasurer offices. When an abstractor performs a title examination,
many types of records and indices must be examined to determine the
conveyances, liens and other matters affecting the title to the property.
Often the examination will reveal matters that are not clear (ex: vague legal
description), and the title examiner may be required to make presumptions
to reach a conclusion as to the status of the title. Below are common errors
made when searching records.
• Using online records vs. researching paper documents located at land
records office in the courthouse. Online title searches are convenient,
but often results in errors when conducting title searches.
• Failure to run all judgment records. Although liens and mortgages can
be found in land records, civil judgments and list may exist in other
records located outside of land records. A civil judgment search must
be conducted.
• Probate records are often overlooked, but should always be searched
at the courthouse.
• Divorce decrees are generally not a part of land records and must be
searched in the civil records office of the Clerk of the Court.
• Failure to search all names within a chain of title and name
variations. The names must be compared and cross-referenced
among various offices (land records, tax records, probate records and
civil court records).
Hidden Off-Record Title Risks Right Ans - Some title issues are not
apparent from a review of the public record. Title
insurance provides coverage for undisclosed title defects that might later
result in a claim. Unknown events include:
• forgery
• documents signed by minors or someone incompetent
• deeds executed under an expired power of attorney
• errors on the public record
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