Owner's Title Insurance Policies & Lender's Title Insurance Policies*
There are two types of title insurance:
■ Lender insurance protects the lender against any loss that might occur due to unknown title defects. It also guarantees the lender to have a valid first lien against the property.
■ Owner insurance protects the buyer from issues that might emerge after the close of sale. Issues may include human error, unpaid liens, forged documents, undisclosed or missing heirs and incorrect legal descriptions. Only an owner’s policy will protect the owner from personal loss, such as legal expenses for a dispute after the sale.
There are no annual premiums with owner insurance. The premium for title insurance is paid when the policy is issued at closing. The policies insure the property owner for as long as the property is owned, and potentially after the property is sold again. Protection is limited to the face amount of the policy, which is usually the market value of the property when it is purchased. Depending on the type of policy issued, the policy may not cover increases in value. Note. The Georgia Association of Realtors' Purchase and Sale Agreement (2014 revision) lowered the deed quality required by sellers from "Warranty" to "Limited Warranty." While this quality of title change may reduce a buyer's legal recourse against his seller, title insurance coverage is unaffected by this change.
Title insurance for property owners, called an Owner’s Policy, is usually issued in the amount of the real estate purchase price. It is purchased for a one-time fee at closing and is valid for as long as the owner or his heirs have an interest in the property. Only an Owner’s Policy fully protects the buyer should a covered title problem arise with the title that was not found during the title search. Possible hidden title problems can include:
▪ Errors or omissions in deeds ▪ Mistakes in examining records ▪ Forgery ▪ Undisclosed heirs
Title insurance for mortgage lenders title insurance is called a Loan Policy. Most lenders require a Loan Policy when they issue a mortgage loan. The Loan Policy is usually based on the dollar amount of the loan and it protects the lender’s interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off.
*Courtesy of Stewart Title Guaranty, Inc.
Searching for a Title Agent? Georgia Title & Escrow Co LLC offers access through both Stewart Title Insurance Company and Old Republic National Title Insurance Company.
Georgia Sales Contract Form Recently Changed to the Detriment of Buyers The 2014 revisions to the Georgia Association of Realtor's purchase and sale agreement form changed the quality of deed required by sellers at closing. Prior to 2014, the contracts required sellers to deed by General Warranty Deed. In the most recent version of the form, the requirement reduced the quality of deed from "General Warranty" to "Limited." Read more about Deeds–
How to Choose Georgia Title for Your Next Closing If you are in active negotiations to purchase or sell real estate, be sure to take the necessary steps to ensure you close with your attorney of choice.
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