Title Company Q&A…
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Q: What is an abstract
A: An abstract is a copy of all documents — recorded in any of the various Clerks of Court offices — which affect the legal right to ownership of immovable property. These generally include copies of those recorded acts that are translative of title (ownership was transferred) and those acts that created encumbrances (such as a mortgage) on the property.
Q: What is a title exam?
A: A title exam is the examination by a licensed Louisiana attorney of all the recorded acts and information contained in the abstract in an effort to determine the legal ownership of a parcel of property and the merchantibility of title.
Q: What is a title opinion?
A: A title opinion is the opinion of a licensed Louisiana attorney regarding the merchantability of title based upon the title examination. It is commonly written to a lending institution, which will rely on the title opinion for the validity and ranking of its mortgage.
Q: What is title insurance?
A: Title insurance protects you from losses that occur from various matters affecting the title to land. There are two basic types of policies: Owner’s policy to protect the owner, and Loan policy to protect the bank’s mortgage.
Q: Why should I have title insurance?
A: There are many important advantages of having title insurance. If your title to property is challenged and you successfully defend your rights of ownership in court, there will probably be legal fees and associated costs. If your defense fails, you could lose the property or, at minimum, experience a serious financial loss. An owner’s title insurance policy would protect your interest in the property and pay for the legal fees associated with the cost of your defense. According to title insurance experts, owners title insurance is necessary, even if your real estate attorney performs a title examination and assumes liability for his work. There are certain matters an owners title insurance policy protects against, such as forgeries or unrecorded construction liens, which the attorney or abstractor could not have discovered.
Q: If the bank requires a Loan policy, why do I need to buy and Owner’s policy?
A: The banks’ policy only protects its interest. You, the homeowner, may be liable for title problems even though the bank is insured.
Q: I paid for a title search-why do I need to buy title insurance also?
A: A title policy insures against many defects which could not be discovered in a title search, as well as insuring against errors made in the title search itself.
Q: Is Owner’s coverage expensive?
A: No. A one time premium covers you throughout your ownership and after. When you are already paying for a loan policy, the additional cost for an Owner’s policy is usually small.
Q: What is Covered Under A Standard Owner’s Policy?
A: The standard Owner’s policy provides the basic coverage for a homeowner:
- It insures that you are the owner of the property.
- It insures against losses from any liens or encumbrances on the property except those listed in the policy.
- It insures against your title being rejected by a subsequent buyer because it is unmarketable due to a title defect or lien.
- It insures you have a legal right of access to the property.
The title policy not only protects you against losses due to title claims covered by the policy, it also pays for the attorney’s fees and costs in defending the title.
You are covered under the policy for as long as you own the property, and also for liability after you sell the property if you provide title covenants in your deed to the new buyer.
20 Important Reasons Why You Should Have Owner’s Title Insurance
These are just some of the hidden title risks that would not be disclosed by even the most meticulous title search, but are covered by an Owner’s policy of title insurance:
- Fraud in the execution of documents
- Undue influence on a grantor of a deed
- False impersonation by someone purporting to be the owner to the property.
- Incorrect representation of marital status
- Undisclosed or missing heirs
- Wills not properly probated
- Misinterpretation of wills and trusts
- Mental incompetence of a grantor of a deed
- Transfer of title by a minor
- Heirs born after the execution of a will
- Incorrect legal descriptions
- Non-delivery of deeds
- Unsatisfied claims not shown on the record
- Deeds executed under expired or false powers of attorney
- Confusion due to similar or identical names
- Dower of courtesy rights of spouses of former owners
- Incorrect indexing of the land records
- Clerical errors in recording legal documents
- Delivery of deeds after the death of the grantor
Q: What do I need to bring to the closing?
A: Both buyers and sellers and/or their respective real estate agents are required to bring a few items to the closing to facilitate a successful transaction. Sellers may be required under the terms of the purchase agreement to provide at closing a termite inspection report issued by a qualified pest inspection company. If a money deposit has been given in conjunction with the execution of the purchase agreement, the seller or listing agent is responsible for bringing these funds to the closing.
Buyers are required to bring evidence of hazard and sometimes flood insurance on the property they are acquiring, and should make arrangements with their insurance agent as to who will be responsible for providing the lender’s copy to the title company handling the closing. At most closings, buyers will be required to bring money for closing cost and any down payment they are making on the property.
Under Louisiana law, for any amount in excess of $2,500, the funds presented at closing must be in the form of either a cashier’s or certified check. Finally, as a practical matter, buyers should always check with their lender for any last-minute conditions that must be satisfied to ensure timely loan funding.