What Is Title Insurance?

Title Insurance In Arizona


You are probably asking yourself “do i need title insurance”, our answer would be absolutely. Your purchase of real estate is more than likely the single largest investment you will make in their lifetime. It is only prudent, then, that you would want to safeguard your rights and investment! Title insurance assures rights and interests to the property as follows; that the transfer of ownership is properly completed; and that new owner receives protection from future claims against the property. It is the most effective, most widely accepted and least expensive way to protect ownership rights. (your rights)

Because land endures over generations, many people may develop rights and claims to a particular property. The current owner’s rights, which often involve family and heirs, may be obscure. There may be other parties, such as government agencies, public utilities, lenders or private contractors, who also have “rights” to the property. These interests limit the “title” for you.

Before the real estate transaction closes here in Arizona, the title company performs an extensive search of all recorded documents related to the property. These records are examined by experienced title officers to determine their effect on the current status of ownership and then a preliminary title report is issued for review. This thorough examination generally allows any pending title “flaws” to be identified and cleared prior to the purchase of the property.

If title insurance companies work to eliminate risks and prevent losses caused by defects in the title BEFORE the closing, then why is a title insurance policy necessary?  Because even after the most careful search, some title flaws may go undetected. Among the most common flaws to title, which are not of record, are: forgery, invalid court proceedings, mistaken legal interpretations, defective deeds, confusion due to similarity of names, previously unrecognized rights of spouses and undisclosed heirs. These problems can surface at any time, now and in the future.

Protection against these flaws and other claims is provided by the title insurance policy which is issued AFTER your transaction is complete. Two types of policies are customarily issued at this time; an “Owner’s Policy” which covers the buyer, for the full amount paid for the property; and a “Lender’s  Policy”, which covers the lending institution with the additional coverage they require, over the life of the loan. When purchased at the same time, a substantial discount in rate is realized.

Unlike other forms of insurance, the title insurance policy requires only one premium for a policy to protect the purchasers and their heirs for as long as they own the property. There are no renewal premiums or expiration dates, unless the property is refinanced with another lender. In this case, only a new lender’s policy will be required.  Each policy is a contract of “indemnity”. It agrees to assume the responsibility for legal defense of your title for any defect covered under the policy’s terms and to reimburse you for actual financial losses up to the policy limits.