How Many Types of Title Property Insurance Policies Exist?
When you are financing, buying, or selling property, a record of the transaction will usually be filed in the public archives, as will the records of other events possibly affecting the ownership of property, such as liens or levies. When you buy title property insurance, the title company will search records to find and possibly remedy many kinds of potential ownership issues, and you will want to be working with a South Carolina real estate attorney during this phase of the buying or selling process.
The state of South Carolina does not require buyers to have title insurance, but most lenders usually do. This means that when you have a mortgage on a property in South Carolina, you are most likely going to need title property insurance to cover it.
Types of Title Property Insurance Policies
There are only two kinds of title property insurance: owner’s title insurance or an owner’s policy and lender’s title insurance or a loan policy. The owner’s policy protects a buyer while a loan policy protects the lender. Again, most mortgage lenders will require a title property insurance policy.
An owner’s policy is usually issued in the amount of the real estate purchase price, and it remains in effect for as long as the owner or their heirs retain an interest in the property. In addition to identifying any risk before a transaction is completed, an owner’s policy also pays valid claims and all defense costs against any attacks on the title.
A loan policy will assure the lender of the validity, priority, and enforceability of its lien or mortgage, helping serve as protection for a lender’s security interest in the property. The loan policy is issued in the amount of a loan, and liability decreases as the mortgage debt is reduced.
The matter of who pays for title insurance can vary. A seller may purchase an owner’s policy for the buyer to tell them the title is clear. Sometimes, both the loan policy and owner’s policy may be issued simultaneously, while a buyer may have to ask for an owner’s policy and pay separately for it.
Title insurance can offer protection to many different parties with interests in real estate transactions. The benefits of title property insurance protect real estate purchasers, sellers, lenders, real estate brokers, attorneys, and homebuilders.
An owner’s policy will offer protection against multiple hazards, including those even the most thorough search of the public records may not disclose, such as forgeries, missing heirs, or recording errors. An owner’s policy will also pay valid claims as well as defense costs against any attacks on the title.
A loan policy will guarantee a lender a valid and enforceable lien, assuring them that no claimants other than the ones noted in a policy have a prior claim against the real estate. The policy also assures that a purchaser-borrower has title to the property being pledged as security for the loan.
A loan policy also obligates the title insurer to pay for defending against any claim filed against the title that might supersede the lender’s lien. When unsuccessful, it must also satisfy that claim should it be upheld in court.
Title property insurance covers several risks, including:
- Mistakes in regards to the interpretation of wills or other legal documents
- Impersonation of owners
- Forged deeds or mortgage releases
- Instruments that are executed under fabricated or expired powers of attorney
- Deeds delivered following the death of a seller or buyer
- Undisclosed or missing heirs
- Wills that are not probated
- Deeds or mortgages by people who are mentally incompetent or of minor age
- Birth or adoption of children following the date of a will
- Mistakes in public records
- Falsified records
- The confusion caused by the similarity of names
- Transfers of titles through foreclosure sales where requirements of foreclosure statutes have not been strictly satisfied
Schedule a Free Consultation with a South Carolina Real Estate Attorney
Are you confused about how to handle title property insurance issues for a property you are hoping to buy or sell in South Carolina? Weeks and Irvine, LLC represents buyers and sellers of residential property as well as the largest developers and homebuilders in the state.