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Flashcards in Title Insurance Deck (10):

Three Methods of Title Assurance

Deed covenants (also called title covenants)
Recording system / title opinion based on a search of the public records
Title insurance


____ _________ provides coverage for future claims or future losses due to title defects which are created by some past event

Title insurance


Premium is paid only once (at closing)
No expiration date
Some terms/language can be negotiated
Difference in timing

Title Insurance Difference


Types of Title Insurance

Lender’s Policy

Owner’s Policy


Usually in the amount of the purchase price
Insures the owner’s interest in the property
Coverage continues as long as the owner or his/her heirs own the property
Coverage can extend even after the owner sells the property (example: if the owner is later sued for a breach of a deed covenant)

Owner’s Policy


Usually in the amount of the loan
Coverage decreases as the loan is paid down and expires when the loan is paid in full

Lender’s Policy


Title company performs a search of the public records to find the documents that affect the property
Title company examines the documents to determine what rights or claims third parties may have against the property

Title company issues a commitment for title insurance (a/k/a preliminary report)

After closing, the title company issues the title insurance policy

Title Insurance Process


Title Company Obligation

Duty to defend

Duty to indemnify


Duty to defend

The title company must pay the costs of litigation to protect the owner’s title


The title company must compensate the owner if a loss occurs
If a claim is made against the owner’s title, the title company must defend the case, pay the litigation costs, and compensate the owner for any loss

Duty to indemnify