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Frequently Asked Questions about Title Insurance

  1. 1) What is Title Insurance?
  2. 2) Why do I have to buy Title Insurance?
  3. 3) If it’s optional why does everyone buy it?
  4. 4) What kind of rights am I protecting?
  5. 5) What does Title Insurance protect against?
  6. 6) Who sets the prices for Fee Title Insurance?
  7. 7) What kind of defects can a title search uncover?
  8. 8) What is Mortgage Insurance?
  9. 9) Who sets the prices for Mortgage Insurance?
  10. 10) Why do I have to buy Mortgage Insurance?
  11. 11) Isn’t this the same thing as Fee Insurance?
  12. 12) It seems like I am buying the same thing twice because it is based on the same search?
  13. 13) If I am refinancing my home why do I have to buy Mortgage Insurance for the Bank again? Didn’t I get it when I purchased and got a loan?

1) What is Title Insurance?

Title Insurance is an insurance policy to protect against future loss resulting from various types of defects that may exist in the ownership of a piece of real estate.

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2) Why do I have to buy Title Insurance?

It’s optional. However, with an Owner’s policy, the owner is protected against any title loss which ensures the value of the property.

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3) If it’s optional why does everyone buy it?

Title Insurance protects possibly the most important investment you will ever make - your investment in real estate.

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4) What kind of rights am I protecting?

Your rights as an owner are called “Fee” insurance. The “Fee” is a legal term that describes all the rights an owner has in a property. The rights of the Fee Owner could consist of: leases; estates of deceased people; inheritance and air rights. The good news is that as a homeowner most of the complex rights are not an issue and you are buying the whole Fee. Fee Title Insurance guarantees you that you own the whole property and no one else has a claim against your right.

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5) What does Title Insurance protect against?

Here are just a few of the most common hidden risks that can cause loss of title or create an encumbrance on title:

  • False impersonation of the true owner of the property
  • Forged deeds, releases or wills
  • Undisclosed or missing heirs
  • Instruments executed under invalid or expired power of attorney
  • Mistakes in recording legal documents
  • Misinterpretations of wills
  • Deeds by persons of unsound mind
  • Deed by minors
  • Deeds by person supposedly single, but in fact married
  • Liens for unpaid estate, inheritance, income or gift taxes
  • Fraud

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6) Who sets the prices for Fee Title Insurance?

Fee Title Insurance Premiums are set by law. Rate charts are available thru The New York State Insurance Department.

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7) What kind of defects can a title search uncover?

A title search uncovers all title defects as well as liens and other restrictions such as:

  • Fraud and forgery
  • Improper information on deeds, wills and trust
  • Tax liens
  • Outstanding easement judgments
  • Missing heirs

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8) What is Mortgage Insurance?

Mortgage Insurance is a guaranty given to the Bank that you borrow money from. It is not mortgage payment insurance (PMI) Mortgage Insurance guarantees the Bank that they have a recorded mortgage against your property and that no other money is owed that is prior in right to their mortgage.

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9) Who sets the prices for Mortgage Insurance?

Mortgage Insurance Premiums are set by law. Rate charts are available thru The New York State Insurance Department.

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10) Why do I have to buy Mortgage Insurance?

All banks require Mortgage Insurance to protect their position as the holder of a lien against your property. If you don’t pay your loan the Bank is guaranteed that they are paid first if your property is foreclosed on and sold at auction.

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11) Isn’t this the same thing as Fee Insurance?

No, Fee Insurance guarantees the Owner. Mortgage Insurance guarantees the Bank.

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12) It seems like I am buying the same thing twice because it is based on the same search?

You are. When you buy a property and you buy Fee and Mortgage Insurance you pay a rate that is discounted to reflect the two types of insurance. This is called the Simultaneous Rate. Therefore, you actually pay less than if you buy it separate.

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13) If I am refinancing my home why do I have to buy Mortgage Insurance for the Bank again? Didn’t I get it when I purchased and got a loan?

Yes you did get it when you got a loan and the Mortgage Insurance you buy protected the Bank that lent you the money the first time from the date you borrowed the money from any thing that happened in the past. The Insurance you buy on the date you refinance covers the bank from the date you last refinanced till now. When you refinance you are entitled to a “reissue rate” that discounts the premium lower than what you paid the first time.

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