Title insurance is a form of indemnity insurance predominantly found in the United States and Canada which insures against financial loss from defects in title to real property and from the invalidity or unenforceability of mortgage loans.
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Title insurance will defend against a lawsuit attacking the title or reimburse the insured for the actual monetary loss incurred up to the dollar amount of insurance provided by the policy.
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However, title insurance can be purchased to insure any interest in real property, including an easement, lease, or life estate.
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Title insurance is available in many other countries, such as Canada, Australia, the United Kingdom, Mexico, New Zealand, Japan, China, South Korea, and throughout Europe.
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The US companies involved buy title insurance to obtain the security of a US insurer backing up the evidence of title that they receive from the other country's land registration system, and payment of legal defense costs if the title is challenged.
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Title insurance professionals seek to resolve problems like these before the transaction closes, since otherwise, their employer, the title insurer, will be required to fix such title defects by paying such unpaid fees or taxes.
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Title insurance policies are fairly uniform, and backed by statutory reserves, which is especially important in large commercial real estate transactions where the buyer and their lender have a large amount of money at stake.
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The US title insurance industry has successfully opposed land registration systems by saying that they are vulnerable to fraud and by contending that an inherently contingent property system more effectively protects property rights.
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One should inquire about the cost of title insurance before signing a real estate contract that provides that he pay for title charges.
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In general, the basic elements of Title insurance they provide to the lender cover losses from the following matters:.
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ALTA members conduct title searches, examinations, closings, and issue title insurance that protects real property owners and mortgage lenders against losses from defects in titles.
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Where most insurance is a contract where the insurer indemnifies or guarantees another party against a possible specific type of loss at a future date, title insurance generally insures against losses caused by title problems that have their source in past events.
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Title insurance companies have the ability to discharge ancient mortgages under the Real Property Actions and Proceedings Law in New York.
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Title insurance plants are sometimes maintained to index the public records geographically, with the goal of increasing searching efficiency and reducing claims.
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Cost of title insurance has two components: premium charges and service fees.
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Title insurance is substantially different from other lines of insurance because it emphasizes risk prevention rather than risk assumption.
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Title insurance industry is highly dependent on real estate markets, which, in turn, are highly sensitive to mortgage interest rates and the overall economic well-being.
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Unlike other forms of insurance, title insurance is not paid for annually, as it has one payment for the term of the policy, which is in effect until the property is resold or refinanced.
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