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Frequently Asked Questions

1) What is Title Insurance?
2) When do I purchase Title Insurance?
3) What will Title Insurance protect me from?
4) Are Title Insurance Policies the same from company to company?
5) If my title has been examined for defects, why do I need Title Insurance?
6) Do I have to purchase Title Insurance?
7) What is the difference between a Lender's Policy and an Owner's Policy?
8) Who pays for Title Insurance?
9) Do I have to use the Title Insurance Company recommended by my attorney, lender or realtor?

 

What is Title Insurance?

Title insurance is a contractual obligation between a homeowner and/or lender and the title insurance company, wherein the insurer, in exchange for a premium payment, provides protection against future losses that might result from a variety of possible title defects or encumbrances that existed at the time of closing.

Before you purchased your home, it may have gone through several ownership changes, and the land on which it stands went through many more. There may be a weak link at any point in the chain that could emerge to cause trouble. For example, someone along the way may have forged a signature in transferring title. Or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party for any claims and legal fees that arise out of such problems.


 
When do I purchase Title Insurance?

The title insurance policy is purchased at closing for a one-time premium, based upon the loan amount and/or purchase price. However, the preparation that leads to the title insurance policy being issued begins in the very early stages of the closing process. Your AFA Closing Specialist will determine when the best time is to order your title search.
AFA offers the competitive pricing in the industry, so we encourage you to compare our prices with those of our competitors. To avoid any confusion, let your attorney, realtor, and lender know that you are going to purchase your title insurance through AFA as early as possible.

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What will Title Insurance protect me from?
Some common examples of problems covered by title insurance include:
  • Improper execution of documents
  • Mistakes in recording of legal documents
  • Mistakes in the indexing of legal documents
  • Mistakes in legal descriptions of property
  • Forgeries and fraud
  • Undisclosed or missing heirs
  • Unpaid taxes and assessments
  • Unpaid judgments and liens
  • Unreleased mortgages
  • Incorrect interpretation of wills
  • Mental incompetence of grantors of property
  • Impersonation of the true owners of the land by fraudulent persons
  • Fraud in securing essential signatures
  • Refusal of lender to provide financing based upon condition of title
  • Refusal of potential purchaser to accept title based upon condition of title
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Are Title Insurance Policies the same from company to company?

Title insurance companies offer industry-standard title policies adopted by the American Land Title Association (ALTA) or an individual state's land title association. You can be assured that the policy protection provided in an AFA policy is identical to that of our competitors.

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If my title has been examined for defects, why do I need Title Insurance?

There are some title defects that cannot be uncovered with even the most thorough search. For example, a search will not uncover that a valid deed was indexed improperly in the land records. Title insurance will protect you from these types of defects.

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Do I have to purchase Title Insurance?

Although highly recommended by experts, you do not have to purchase title insurance if the buyer is paying cash for a home. The vast majority of banks and other mortgage lenders, however, require that the borrower obtain a Lender's Policy of Title Insurance equal to the loan amount.

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What is the difference between a Lender's Policy and an Owner's Policy?

A lender's policy protects the lender up to the amount of their outstanding debt on a mortgaged property. The value of the policy decreases as the loan principal is paid down and expires when the mortgage is paid in full. An owner's policy is purchased in an amount equal to the purchase price and does not expire when the mortgage loan is paid in full or upon the sale of the property. The owner's policy is there to protect the owner's equity in the property.

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Who pays for Title Insurance?

Often, local custom dictates whether the buyer or seller pays for the premium, but sometimes sellers and buyers negotiate who will pay the premium without regard for local customs and procedures. Be sure to ask your real estate professionals what is predominant in your area.

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Do I have to use the Title Insurance Company recommended by my attorney, lender, or realtor?

No. You have the absolute right to choose your own title insurance company. Simply provide your attorney, lender, or realtor with American Freedom Assurance's contact information that is available to be printed from this site early in the closing process to avoid confusion. Also, if anyone insists that you use a company they recommend, it's in your best interest to ask them if they are receiving a commission or referral fee from the company or if they are affiliated with the company they are recommending.

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