Proof of Ownership

Extended Coverage Policy

-Standard coverage plus defects discoverable through the following -Property inspection, including unrecorded rights of persons in possession -Examination of survey -Unrecorded liens not known by policyholder

Not covered by either policy

-defects and liens listed in policy -defects known to buyer -changes in land use brought about by zoning ordinances

Standard Coverage Policy

-defects found in public records, -forged documents, -incompetent grantors, -incorrect marital statements, -improperly delivered deeds.

After examining the public records, the title company usually issues what may be called a preliminary report of title or a commitment to issue a title policy. This describes the type of policy that will be issued and includes:

-the name of the insured party; -the legal description of the real estate; -the estate or interest covered; -conditions and stipulations under which the policy is issued; and -a schedule of all exceptions, including encumbrances and defects found in the public records and any known unrecorded defects.

Exclusions

Causes of loss, exposures, conditions, etc. listed in the policy for which the benefits will not be paid.

Subrogation

The right acquired by the title company to any remedy or damages available to the insured when a title company makes a payment to settle a claim covered by a policy.

Attorney's Opinion of Title

based on a review of the abstract is sufficient evidence of title. Similar to a certificate of title, the attorney's opinion of title does not protect against defects that cannot be discovered from the public records. Many buyers purchase title insurance to defend the title from these defects.

Title Insurance

contract under which the policyholder is protected from losses arising from defects in the title. A title insurance company determines whether the title is insurable, based on a review of the public records. If so, a policy is issued. Unlike other insurance policies that insure against future losses, title insurance protects the insured from an event that occurred before the policy was issued. Title insurance is considered the best defense of title: the title insurance company will defend any lawsuit based on an insurable defect and pay claims if the title proves to be defective.

Lender's Policy (Mortgagee Policy)

issued for the benefit of the mortgage lender and the amount of the mortgage loan will determine the amount of the coverage.

Owner's Policy

issued for the benefit of the owner (new buyer) and the owner's heirs or devisees and is issued for the property's purchase price

The Torrens System

legal registration system used to verify ownership of real estate. Where it is recognized, registration in the Torrens system provides evidence of title without the need for an additional search of the public records.

Certificate of Title

statement of opinion of the title's status on the date the certificate is issued. A certificate of title is not a guarantee of ownership. Rather, it certifies the condition of the title based on an examination of the public records—a title search. The certificate may be prepared by a title company, licensed abstractor, or attorney. An owner, mortgage lender, or buyer may request the certificate.