| |
Title insurance is
indemnity
insurance against financial loss
from defects in
title to
real property and from the
invalidity or unenforceability of mortgage liens. Title
insurance is principally a product developed and sold in the
United States as a result of the
comparative deficiency of the U.S. land records laws. It is
meant to protect an owner's or a lender's financial interest
in real property against loss due to title defects,
liens or other matters. It will
defend against a
lawsuit attacking the title as it
is insured, or reimburse the insured for the actual monetary
loss incurred, up to the dollar amount of insurance provided
by the policy. The first title insurance company, the Law
Property Assurance and Trust Society, was formed in
Pennsylvania in 1853. The vast majority of title
insurance policies are written on land within the U.S.
Typically the real property interests
insured are
fee simple ownership or a
mortgage. However, title insurance
can be purchased to insure any interest in real property,
including an
easement,
lease or
life estate. Just as lenders
require
fire insurance and other types of
insurance coverage to protect their investment, nearly all
institutional lenders also require title insurance to
protect their interest in the collateral of loans secured by
real estate. Some mortgage lenders, especially
non-institutional lenders, may not require title insurance.
Buyers purchasing properties for cash (without a lender)
often want title insurance as well.
Prior to the invention of
title insurance, buyers in real
estate transactions bore sole responsibility for ensuring
the validity of the
land title held by the seller. If
the title were later deemed invalid or found to be
fraudulent, the buyer lost his investment.
In 1868, the case of
Watson v. Muirhead was heard by
the
Pennsylvania Supreme Court.
Plaintiff Muirhead had lost his investment in a real estate
transaction as the result of a prior
lien on the property. Defendant
Watson, the
conveyancer, had discovered the
lien prior to the sale but told Muirhead the title was clear
after his lawyer had (erroneously) determined that the lien
was not valid.
|
|
Customer Service