What is Title Insurance?
Title Insurance protects you, the owner of property, and insures that you are the rightful owner of your property, and that there are no liens or other encumbrances affecting your property that could result in financial and tangible losses to you. In other words, nothing exists that could devalue your property by forcing you to pay for things that should have been paid for by prior owners, or by limiting your ability to use your property as you would like.
Primarily there are two types of title insurance policies. The Owner’s Policy is designed for the owner of property; and the Lender’s Policy is designed for mortgage companies, or banks which lend money where the property is used as collateral. When a buyer purchases an Owner’s policy, the Lender’s policy is included in that fee. The Owner’s policy insures that the owner is the rightful owner of the property and that there are no liens, judgments, or encumbrances against the property. The Lender’s policy covers the lender for monetary loss that they may incur if their are any liens, judgments or encumbrances that interfere with the new mortgage.
In order to issue title insurance, title companies require that a title search of the property be performed. Every document that is created which affects property is presumed to be recorded at the Recorder of Deeds Office of the Court House in the county where the property is located. A title search is the collection of all the documents that are recorded at the Recorder of Deeds office which affect title to a particular property.
Using the information acquired in the title search, a Commitment for Title Insurance is prepared. The Commitment is a commitment to insure a piece of property. It lists all of the mortgages, liens, taxes and encumbrances that must be taken care of by the seller prior to transferring the property to buyer.
It is the buyers responsibility to purchase title insurance. The Title Insurance agency provides a place for settlement and prepares the deed and other settlement documents.
Premium rates paid for title insurance are based upon the purchase price, or loan amount, which will be the amounts insured on the policies. In Pennsylvania, the rates for title insurance are standard rates, regulated by the Insurance Department of Pennsylvania. Rates are filed on an all inclusive system, which means they include not only the cost of the title insurance premium, but also the cost of the title search and the closing or settlement fee. We can provide coverage to you under several different fee arrangements.
When you purchase a property, initially you sign an agreement to purchase the property. This document is called the Agreement of Sale. Once that is complete, all the inspections, loan application and approval process, appraisal and all other documentation must be collected. When that has all been finished, you are ready to go to settlement on the property. Settlement is the time you sit down with the sellers of the property and sign all the final documentation transferring the property to you. It is also the time the sellers hand you the keys.
When you refinance, initially, you will apply for your new mortgage. Inspections, appraisal, loan approval and all other documentation must be collected. When that is complete you are ready to go to settlement. At settlement you sign all the final loan documentation for your new loan.
The title company coordinates all the documentation that needs to be signed at closing. They make sure all the required items shown on the Title Insurance Commitment have been taken care of. They sit at the table with you and explain to you the documents you will be signing and answer any questions you may have. They are also responsible for all the money that exchanges hands between the buyer, seller and lender and they pay all bills associated with the transaction.
After settlement is complete the title company will make sure your new documents are recorded at the Recorder of Deeds office. After they have been filed, the original documents will be returned to the title company. The title company will produce the Title Insurance policies and forward them to you, or your lender, along with the original recorded documents.
For residential property, federal regulations mandate that it is the buyer’s choice who handles their settlement. Because rates and fees are mostly the same no matter what title company you select, you should select a title company you feel comfortable with, a title company you can rest assured will do everything the right way to protect you.
Recommended Title Company
376 East Main Street
Collegeville, PA 19426,
(610) 489 – 3656