An important part of title insurance is its emphasis on risk elimination before insuring. This gives you, the policyholder, the best possible chance for avoiding title claim and loss.
Title insuring begins with a search of public land records affecting the real estate concerned. An examination is conducted by the title agent or attorney on behalf of its underwriter to determine whether the property is insurable. The examination of evidence from a search is intended to fully report all “material objections” to the title. Frequently, documents that don’t clearly transfer title are found in the “chain,” or history that is assembled from the records in a search. Here are some examples of documents that can present concerns:
Deeds, wills and trusts that contain improper wording or incorrect names;
Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes;
Easements that allow construction of a road or utility line;
Pending legal action against the property that could affect a purchaser; or
Incorrect notary acknowledgments.
Through the search and the examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful preventative work cannot locate all hidden title hazards.