Title insurance policies are available for a one-time premium payment at the time the property is purchased and/or financed. The premium is based on the purchase price/loan amount and is typically collected at closing with all other funds for the transaction. There is no annual premium to pay like there is for other lines of insurance (i.e. – automobile, homeowner’s). Purchasers may obtain an owner’s policy of title insurance and mortgage lenders may obtain a loan policy of title insurance to protect their respective interests.
Most mortgage lenders require the borrower to purchase a loan policy of title insurance on behalf of the lender. The loan policy of title insurance only provides protection for the lender’s interest in the property. It does not provide any protection for the purchaser’s interest in the property. The purchaser must obtain their own policy. The additional cost of obtaining an owner’s policy in addition to a loan policy depends on the difference between the loan amount and purchase price. In most cases, it is a very small incremental additional charge. Prudent purchasers will always opt for an owner’s policy at the time of closing. The incremental additional cost far outweighs the additional costs that can arise in the future if an owner’s policy of title insurance is not purchased and a defect becomes known after ownership of the property is acquired. The owner will be left to defend their title and settle the dispute without the benefit of a title insurance company and will likely incur significant legal fees in doing so. In a worst case scenario, the property can be lost if there is a complete failure of title.
A title agent for Conestoga will conduct a thorough search and examination of the title to the property prior to closing in an effort to discover potential defects, liens or encumbrances. A title insurance commitment will then be prepared showing all defects, liens and encumbrances discovered during the search and exam. The commitment will specify requirements that need to be met including liens that need to be paid. It will also list specific exceptions that will not be covered by the policy including easements and restrictions that are of public record. Conestoga’s agent will work to clear all known liens and defects and conduct a closing. Instruments (Deeds, Mortgages) will be executed at closing to transfer the title and funds will be collected to pay open liens, taxes, etc. The title insurance premium will also be collected at closing. Conestoga’s agent will ensure the instruments are duly recorded at the local courthouse then issue the title insurance policies that were paid for at closing.