Frequently Asked Questions
What is a Title Company?
A title company is a business that searches, examines and insures real estate titles. We investigate the public records to verify ownership in real estate and to assure a purchaser or lender that title is free of title flaws that could adversely affect ownership. We search various county, state and federal offices, including the Register of Deeds, County Treasurer, Register of Probate and Clerk of Circuit Courts, along with web sites such as the Wisconsin Circuit Court Docket, Wisconsin Child Support Lien Docket, the Wisconsin Department of Financial Institutions and the Federal Terrorist sites. When title flaws are discovered, we work to clear up these issues, never losing sight of our ultimate mission: to protect the consumer.
In addition to performing title research, we also are in the business of closing real estate and loan transactions. Our closers obtain loan pay-offs on existing mortgages, clear judgments, pay or pro-rate taxes, search for special assessments and / or association dues and order all documents necessary to complete the transaction.
What is Title Insurance?
The last thing a homeowner wants is a claim against his or her ownership. Our job is to make sure the purchaser in a real estate transaction has clear title to their real estate. After diligently searching and examining the title to a property to be purchased, we show the proper person or entity in title, along with all liens and encumbrances to the property. This is all reflected in what we call a Title Insurance Commitment, which is our commitment to insure a purchaser subject only to the matters reflected in the commitment. A purchaser then reviews the commitment and either accepts title as shown or raises an objection to issues unacceptable to him. If there are issues, they are cleared or the transaction fails to close. After the closing, a Title Insurance Policy is issued, protecting the purchaser from attacks to title, subject only to issues specifically excepted within the policy.
Why is Title Insurance Needed?
The American Land Title Association reports that 36% of all real estate transactions have a defect in title. Title insurance protects against loss or damage against any future claims people may have against your ownership of the property.
Title Insurance vs. Other Types of Insurance (i.e. Auto Insurance, Home Insurance, etc.)?
Title Insurance is risk prevention opposed to other types of insurance which is considered risk assumption.
What this means is that when you are insured, normally, they are insuring you under the assumption that something will eventually happen where they will have to insure you and pay for whatever it is that happened.
Title Insurance is different in a couple different ways. Since title to a piece of property is traced backwards from the current owner, the past is insured. Future acts from the date of the policy are excluded from coverage; therefore making title insurance a risk elimination insurance. Title insurance also differs as it is a one-time purchase and there are no annual premiums to pay.
Why is Title Insurance Important when Refinancing?
Why do you need to buy title insurance again even though you purchased a policy when you first bought your home and there is no change in ownership? It's because a separate policy is needed by the lender insuring the validity of your mortgage when it is made. For as long as you own the property your mortgage is valid, but it doesn't insure the new mortgage created when you refinance, and it doesn't provide protection against events that may have transpired between the time you purchased the property and the time it was refinanced. Lenders also insist on a new title policy because many mortgages are packaged as securities and sold to investors in the secondary mortgage market. Title insurance is the only practical pay to provide the assurance that investors demand and ensure that the mortgages backing these securities are valid and enforceable.
Doesn't your Deed Take Care of Giving you Clear Title?
Not at all. A "deed" is merely an instrument whereby a seller transfers his or her right of ownership, whatever it may be, to you. It is not proof that the person described as the seller is actually the owner. It does not do away with claims or rights others may have in the property. From the deed, you cannot determine what rights, liens or claims may be outstanding against your title.
Are All Taxes and Special Assessments Paid?
Unpaid real estate taxes are a first lien on any real property. If there has been a tax sale or forfeiture or any other objection or protest, it means that there are complications standing in the way of a clear title.
What is an Abstract? Doesn't it Tell About the Property?
An abstract, which is used in some parts of the country, is a history of the title to property as revealed by the public records. Deeds, mortgages, other instruments and legal proceedings which have affected property through the years are all included in the abstract. If something is revealed in the abstract which might stand in the way of a clear title, it is up to the owner and owner's attorney to clear it away. If they cannot do this, it must be accepted as a limitation on your right of ownership. Also, it is not infrequent for matters which seriously affect the title to be omitted in an abstract, because they are not shown in the public records.
Is Title Insurance Expensive?
The cost of title insurance on any piece of property you may decide to buy is very small when compared with the benefit and security it gives. And, unlike other forms of insurance, there are no annual payments to keep the policy in force, you pay only one premium. The original premium is your only cost as long as you or your heirs own the property.
What is a Lender's Policy?
Also known as a loan policy or a mortgage policy, protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may not be known at the time of the sale. This policy ONLY protects the lender's interest. It does NOT protect the purchaser. That is why a real estate purchaser needs an owner's policy.
What is an Owner's Policy?
An owner's policy protects you, the purchaser, against a loss that may occur from a fault in the ownership or interest you have in the property. You should protect the equity in your new home with a title policy.
What does an Owner's Policy Provide?
For a one-time premium (paid at closing), an owner's policy protects the homeowner from enumerated title risks for as long as the insured (or their heirs) owns the property. It provides protection from financial loss due to demands that may be charged against the title to your home, up to the cost of the title property. It provides payment of legal costs if the title insurer has to defend your title against a covered claim. It also provides payment of successful claims against the title to your home covered by the policy, up to the cost of the policy.
Why Does the Seller Need to Provide Title Insurance?
Any purchaser will need evidence that his investment in your property is free of title defects. The title insurance policy that you provide the purchaser is a guarantee that you are selling a clear title to your real estate, unencumbered by any legal attachments that might limit or jeopardize ownership. It will reassure your purchaser that he or she is protected from any risks or losses and could help you chose your deal.
Why the Buyer Needs Title Insurance?
Without title insurance, you may not be fully protected against errors in public records, hidden defects not disclosed by the public records, or mistakes in examination of the title. As a result, you may be held fully accountable for any prior liens, judgments or claims brought against your new property. If this should occur, your title policy insures that you will be defended at no cost against all covered claims up to the amount of the policy.
How Much does Title Insurance Cost?
The insurance commission approves and controls the premiums tor title insurance policies. The premiums are PAID ONLY ONCE and the cost depends upon the purchase price of the property and the policy amount must be equal to the purchase price.
What does Title Insurance Protect From?
Undisclosed heir, Forged deeds, mortgages, wills, releases and other documents, False impersonation of the true land owner, Deeds by minors, Documents executed by a revoked or expired Power of Attorney, False affidavits of death or heirship, Probate matters, Fraud, Deeds and wills by persons of unsound mind, Conveyances by undisclosed divorced spouses, Rights of divorced parties, Deeds by persons falsely representing their marital status, Adverse possession, Defective acknowledgements due to improper or expired notarization, Forfeitures of real property due to criminal acts, Mistakes and omissions resulting in improper abstracting, Errors in tax records, Vehicular and pedestrian access to and from the land based on legal rights, Correction of violation of existing subdivision restriction, Lost title due to violation of subdivision restriction or prior covenant, Inability to obtain building permit due to subdivision restriction, Single family residence violates zoning and enables owner from building a residence, Existing improvements under the existing mineral or water rights, Enforcement of discriminatory covenant, Neighbors encroachment, Supplemental tax assessments not previously assessed prior to policy date, Residency with the address is not located on the land transferred, Error in map associated with the land.
What is in a Title Search?
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Chain of Title
This is simply a history of the ownership of a particular piece of property, telling who bought it and sold it, and when. The information may be derived from public records; usually a County Clerk's or Recorder's Office, or obtained from title plants privately owned and maintained by title companies. There are great varieties of such plants; index cards, punch cards, tract books, even sophisticated computerized plants. However, they all contain essentially the same information from which the history of the title may be searched.
This is a search to determine the present status of general real estate taxes against the property. The tax search will reveal if taxes are current of whether any taxes are past due and unpaid from previous years. In addition, the tax search will indicate the existence of any special assessments against the land and, if so, whether or not these assessments are current or past due.
A due and unpaid tax or special assessment is a prior lien or claim on the property above all others. If a buyer purchases property with unpaid and past due taxes or assessments against it, he or she is likely to find a government body, the village, county or state, placing the property up for sale to pay those taxes or assessments. A tax search reveals the status of the taxes. Title insurance protects the buyer against loss from unpaid and past due taxes and assessments.
Judgment and Name Search
One of the most important parts of the title search is to determine if there are any unsatisfied judgments against the seller or previous owners which were in existence while they owned the title. A judgment is a general lien against the debtor's real estate and constitutes security for any money owed under the judgment. The real estate can be sold to satisfy the judgment.
It is extremely important to be sure that a title is not subject to judgments against the seller or previous owners. Title insurance provides this protection. A judgment against a person names Smith may affect the title of a seller named Smith, depending on whether or not they are the same person. So all possible variations of the name must be examined.
When these searches have been completed, the title company issues a commitment to insure, stating the conditions under which it will insure the title. The buyer and seller and the mortgage lender can proceed with the closing of the transaction after clearing up any defects in the title which may have been uncovered by the search and examination.
The mortgage lender is as concerned as the buyer about the quality of the title because the property is to be security for the new mortgage loan. The mortgage lender requires assurance that it has a valid first (or another acceptable priority) mortgage lien on the property This is not only common sense, but generally is a legal requirement of regulated mortgage lenders.
The lender's title insurance, however, doesn't protect the new buyer of the property. Although the land is the same, the interest of the buyer and the interest of the lender are very different. The provisions of a lender's title insurance policy are very different from those of a buyer's policy, so the buyer should obtain his own policy, often issued simultaneously with the lender's policy.