You buy a home. Everything is signed, sealed, and delivered. At long last, it's all
yours -- land, house, lawn, trees and mortgage.
Time to celebrate!
Maybe.
Maybe not.
What if, many years ago, a deed was forged on the property you just bought?
What if there are unpaid taxes? Or a clerical error in public records? Or previously
unknown heirs of a former owner?
What if?
Owning your property "free and clear" involves more than having a deed in hand. A deed does not cancel certain prior "rights" and "claims" other people may have to your property -- rights whose existence you never suspected; claims that may go back in time months or decades to the earliest owners of your newly acquired property.
He lost his home twice...because of title defects.
Losing a home is cruel thing, but life can be cruel even to
those destined for greatness.
Abraham Lincoln was born in a meager, one-room cabin on the Big South Fork of Nolin's Creek near Hodgenville, Kentucky. It had a dirt floor, one window and a stick-clay chimney. Lincoln's father, Tom, had paid $200 for the cabin and 300 acres of discouraging land. It wasn't worth much but it was home and the young family's only chance for a decent life.
After four years of fighting mosquitoes, heat and hardscrabble land, the Lincolns had to pack up and leave. There was a defect in the title. They didn't have the right sort of papers and somebody else had a better claim to the land. With three-year-old Abe in his mother's arms, the family moved eight miles away to Knob Creek.
In less than four years, Tom Lincoln had to go to court to prove his ownership rights to this second farm. Another claimant to the land sued him as a "trespasser.'' Tom Lincoln won the suit, but was haunted by the fear that he might someday lose another property. There was enough talk of land -titles, landowners. landlords, land-laws, land-lawyers and land-sharks to make him unsure of his title. After all, Daniel Boone. the first pioneer of the Kentucky wilderness, had lost every inch of his once vast landholdings because he had "the wrong kind of papers." Tom decided to move his family to Indiana where there was rich, black land-government land with clear title and the right kind of papers. Thus, Abraham Lincoln lost a second. home to title problems.
It was the anxiety and outright losses of the Lincolns and other hard-working Americans that gave rise to today's title insurance industry.
Today, title insurance is just as important as ever. The same potential flaws in title exist. A home is still the largest purchase most of us make in our lifetime. And, with escalating land values, the loss of property can still bring a family to ruin.
Protecting Your Rights
"WHAT PROTECTION," you may ask, "do I have against such claims? How can I be sure my property is really mine?" The answer to both of those questions is real estate ownership insurance, commonly known as title insurance.
Title Insurance
TITLE INSURANCE is an insured statement of the condition of your "title" or ownership rights to a certain piece of property. A title insurance policy describes your property in detail and states what limitations, if any, there are to your ownership. (For example, you may take ownership subject to existing liens or encumbrances. Or you may not own mineral rights. Or easements may have been granted to utility companies or adjacent property owners.)
Most importantly, a title insurance policy guarantees that the property you are purchasing is free of undisclosed liens, confusion in the rights of ownership and other clouds on the title. In short, it guarantees that you own the property for which you bargained.
Peace of Mind
A title insurance policy provides you with peace of mind. It takes the risk out of acquiring property whose legal history is unknown to you. While there should be no risks in transferring property, they do exist. Through the years, your new property may have changed hands many times through sale, inheritance, foreclosure, or bankruptcy. Each transfer was an opportunity for an error in title to arise. If an error occurred, and has never come to light, it puts your title in jeopardy. You could lose your property and the money you paid for it. And, even if you successfully defend your rights of ownership, the cost in time and legal fees could be prohibitive.
Among the many risks against which title insurance protects you are:
 | Confusion from similarity of names |
| Forged documents |
| Signatures of minors or mentally incompetent persons |
| Mistakes in recording legal documents |
| Undisclosed or missing heirs |
| Fraud |
| Invalid divorces |
| Misrepresentation of marital status |
| Unpaid taxes |
| Clerical errors in public records |
| Wills not probated |
How It Works
BEFORE A POLICY is issued, the title company or one of its agents conducts a search of public records, maps and documents. The records trace back to colonial estates, pioneer homesteads or Spanish land grants and forward to the current owner. Only after collecting, examining and interpreting appropriate records is a policy issued insuring the condition of title.
BESIDES DESCRIBING your property and spelling out any recorded limitations on your ownership, a title insurance policy sets forth in clear terms what First American Title Insurance Company will do in the event that a flaw in title is discovered or your rights of ownership are challenged.
In simple terms, the title insurance issuer agrees:
- To defend your title in the courts, as insured, at its own expense.
- To correct or clear the title when possible.
- To promptly pay you for your loss in the event of an unsuccessful defense of your title.
Two Policies in One
THIS IS IN EFFECT two policies in one. One provides coverage for legal expenses to defend title. The other provides for reimbursement in the event of a loss.
One, Low Premium
A LOW, ONE-TIME premium is all you pay to obtain the protection and peace of mind of a title insurance policy. So long as ownership remains in your name or that of your heirs, there is no additional cost. The policy is issued in an amount equal to the purchase price you pay. Of course, the greater the coverage given, the higher the premium.
100 Years of Protection, Plus
THE PROTECTION you get from a title insurance policy is no better than the company that underwrites it. It is in your interest to select a title insurer that meets the highest standards of financial stability, professional integrity and responsible management.
Note: This information is a summary of the benefits available under a title insurance policy. Please refer to the policy itself to determine the exact benefits and the exclusions from coverage.
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