© 2008 Dearborn Real Estate Education CHAPTER 5 UNDERSTANDING A TITLE POLICY.

© 2008 Dearborn Real Estate Education

CHAPTER 5

UNDERSTANDING A TITLE POLICY


• List 2 types of policies and cite the differences

• Recognize and explain parts of the policy

LEARNING OBJECTIVES


• Discuss coverage of the newest 2008 owner’s title policy

• Explain coverage on the newest 2008 lender’s policy

Learning Objectives


Review Key Terms

Check off any you do not recognize


Title Policies Changed in 2008

•Coverage was increased

•Language was simplified

•The many policies available for single family housing were reduced to just the 2008 owner/lender policies


Title companies deal with problemsdifferently.

You can You can shopshop a title company a title company for for extraextra coverage you want. coverage you want.


Marketable title vs.Insurable title


Insurable title vs.

Salable property


The two primary types of policies -

Lender’s and Owner’s


ALTA 2008 title policies all have the

same six elements


32 COVERED RISKS INCLUDING

• Someone has an interest other than disclosed

• Forgery or Impersonation• Invalid documents


32 COVERED RISKS INCLUDING

• Undisclosed Liens including: – Taxes, – Assessments, – Mortgages,– Judgments,– State or Fed Tax Liens, – Mechanic’s Liens, – Homeowners Association Liens


Covered Risks includea guarantee for “Legal Access”

Legal Access is different from Physical Access

?


All policies have a Duty To Defend regardless of the fact

the claim seems bogus

Duty to Defend


EXCLUSIONS Outline what is disqualified as a claim under the policy

• Government Rights• Built according to local building code


EXCLUSIONS disqualify as a claim

• Risks created, allowed or agreed to by the insured


EXCLUSIONS

disqualify as a claim under the policy

•Failure to pay value for your title


Property lying outside of insured property such as roads, easements, or lakes

EXCLUSIONS

disqualify as a claim


CONDITIONS

describe the rights and responsibilitiesof the Title Insurer and the Insured


CONDITIONS: Insured must

• Provide Proof of Loss• Cooperate with Insurer• Allow Insurer to start any legal actions


CONDITIONS: Insurer has Rights

• To pursue litigation• To cure the title• To negotiate a settlement


Enhancements to the 2008 Policy

• Temporary Housing Coverage for loss of property use due to title problem, including cost of moving personal property and cost to repair property caused by moving.


• Policy increases 10% per year for first 5 years up to 150% of purchased amount.

Enhancements to the 2008 Policy


CONDITIONS

• Insured agrees to SUBROGATE her rights under the policy


CONDITIONS:

• Insured agrees to ARBITRATE any policy of $1,000,000 or less

• Over $1,000,000 both Insurer and Insured must agree


SCHEDULE A identifies

the exact legal owner, name of buyer/borrower,name of insured,legal description, amount of insurance, type of policy, etc.


The 2008 Policy has “Extended Coverage” it now covers:

• Parties in possession not shown by the public record

• Easements not shown by the public record

• Questions of Survey• Gap period


SCHEDULE B is the Meat of the policy

All exceptions to title are shown here.


The 2008 LOAN POLICYCOVERED RISKS

• Mortgage has priority over other liens

• Address is as shown on policy• There is a 1-4 family residential

structure on the land• Zoning laws allow the structure• The parcel has been legally

subdivided


LENDER CONDITIONS

Title Insurer can pursue litigation for so long as it deems necessary


LENDER CONDITIONS

• If title cannot be cleared, policy increases by 10% over remaining loan balance

• Arbitration over $2,000,000


LENDER EXCLUSIONS

• Lender must comply with local business laws

• Lender must comply with usury laws


ENDORSEMENTS

Used to modify a policyby adding or deleting coverage.

They can be critical to closing a transaction.


The New 2008 Title Policiesprovide morecoverage than ever, including some potential future problems.


REVIEW QUESTIONS

© 2008 Dearborn Real Estate Education CHAPTER 5 UNDERSTANDING A TITLE POLICY.

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Transcript of © 2008 Dearborn Real Estate Education CHAPTER 5 UNDERSTANDING A TITLE POLICY.