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Title Insurance for your Rural Mortgage

Leigh Rodebaugh
Educational Opportunities: 
Home > Education & Events > May 2019 > Title Insurance for your Rural Mortgage

Buying or refinancing a home can be complicated. There’s lots of paperwork, research and decisions involved in a real estate transaction. Trying to stay up to date and educated on every aspect is a challenge. One area that can be confusing is Owner’s Title Insurance. What is it? Is it necessary? 

What is Owner’s Title Insurance?
Unlike a title for a car, the “title” to your home isn’t a simple piece of paper. While the deed is the legal document that transfers title in real property from one person to the next, title is the ownership rights that go along with the property.  Owner’s Title Insurance protects a buyer from any problems that may have occurred in the chain of title to the property before a certain date in time, typically the date of purchase or refinance.

A title company extends Owner’s Title Insurance to a buyer after the title company performs a search of the public records up to the point of the purchase.  The title professional reviews prior documents associated with the property to ensure they were prepared and signed correctly, the correct legal description was used, and all the debts and potential liens associated with the property have been paid or will be paid at closing. After the closing, the buyer will receive an Owner’s Title Insurance Policy.  The policy is good for as long as the buyer own the property.  It provides protection against claims based on issues related to the title to the property before the closing.

Is Owner’s Title Insurance Necessary?
This question is complex. Owner’s Title Insurance policies protect the buyer from any fraud, liens, judgments, or other clouds on the title that happened before the purchase. After searching the public records, a title professional prepares a report, which will list outstanding issues or restrictions related to the property y and indicate what is required to remove any clouds to the title for the closing.  Buyers can rest assured that if the closing satisfies all title insurance requirements, they will receive an Owner’s Title Insurance policy that confirms the title insurance company will defend them in the event of a title dispute.
Another common issue that comes up, especially on rural properties, is easements. Easements are a way for a property owner to allow someone else to cross or use a certain portion of their property. For example, a property owner may allow for an easement giving a neighbor access to their property to use a driveway or well.  Situations arise where multiple people may need to use a driveway or road for other purposes — such as accessing a field.  An easement is the legal tool used to define the agreed upon terms of use. Easements allowing access to a property by utility companies or for the maintenance of public roads and highways are quite common. The buyer should carefully review all easements associated with a property before closing to ensure knowledge of the associated terms and restrictions.

Purchasing Owner’s Title Insurance gives homeowners the peace of mind that comes with knowing their real estate investment is protected from prior title defects. If you’re house hunting in the country or a small town, it’s smart to work with a lender who understands rural real estate transactions and can collaborate with the title company to protect your investment. At Compeer Financial, we’re fortunate to have our own internal title insurance services team, adding another layer of efficiency to every real estate transaction we do.
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