Real estate has traditionally been a family's most valuable asset. It
is a form of wealth that is protected by many laws. These laws have been
enacted to protect one's ownership of real estate and the improvements
located on the land. The owner, the owner's family, and the owner's heirs
have extremely b rights or claims in and to the property that you are
buying. Those who may have an interest in or lien upon the property could
be governmental bodies, contractors, lenders, judgment creditors, the
Internal Revenue Service, or various other individuals or corporations.
The real estate may be sold to you without the knowledge of the party
having a right or claim in and to the property. In addition, you may
purchase the real estate without having any knowledge of these rights
or claims. In either event, these rights or claims remain attached to
the title to the property that you are buying until they are extinguished.
The Past Can Determine Your Future
Generally, a person thinks of insurance in terms of the payment of future
loss due to the occurrence of some future event. For instance, a party
obtains automobile insurance in order to pay for future loss occasioned
by a future "fender bender"
or for the future theft of the car.
Generally, a person thinks of insurance in terms of the payment of future
loss due to the occurrence of some future event. For instance, a party
obtains automobile insurance in order to pay for future loss occasioned
by a future "fender bender"
or for the future theft of the car. Title insurance is a unique form
of insurance. It provides coverage for future claims or future losses
due to title defects which are created by some past event (i.e., event
prior to the acquisition of the property.) These risks are far less obvious
than those protected against by automobile insurance, but can be just
as devastating. The following information will answer some commonly asked
questions about title insurance.
Will You Get Clear Title?
It is of utmost importance that you receive clear title to the property
when you purchase real estate. In order to do so, you must first be informed
of any existing rights or claims that may, in the future, threaten your
title and possession to the property. Title insurance provides you with
this twofold protection.
How Do You Find Out What Claims
Exist?
In order to determine the status of title, Chicago Title conducts a diligent
search of the public records for those documents associated with the
property. Chicago Title then examines those recorded documents in order
to determine if there are any rights or claims that may have an impact
upon the title to the property. The title search may reveal the existence
of recorded defects, liens or encumbrances upon the title such as unpaid
taxes, unsatisfied mortgages, judgments and tax liens against the current
or past owners, easements, restrictions and court actions. These recorded
defects, liens and encumbrances are reported to you prior to your purchase
of the property. Once reported, these matters can be accepted, resolved
or extinguished prior to the closing of the transaction. In addition,
you are protected against any recorded defects, liens or encumbrances
upon the title that are unreported to you and which are within the coverage
of the particular policy issued in the transaction. This is the first
benefit you receive from title insurance.
What About Undiscovered Claims?
The title to the property that you have purchased could be seriously
threatened or lost completely by hazards which are considered
"hidden risks." "Hidden Risks" are those matters,
rights or claims that are not shown by the public records and, therefore,
are not discoverable by a search and examination of those public records.
Matters such as forgery, incompetency or incapacity of the parties, fraudulent
impersonation, and unknown errors in the records are examples of "hidden
risks"
which could provide a basis for a claim after you have purchased the
property. In order to protect you against this possibility, Chicago Title
provides insurance coverage for such claims. This is the second benefit
you receive from title insurance.
How Does a Title Insurance
Policy Protect Against All These Claims?
If a claim is made against your insured title, Chicago Title Insurance
Company protects you by: (1) Defending your title, in court if necessary,
at no cost to you, and (2) Bearing the cost of settling the case, if
it proves valid, in order to protect your title and maintain your possession
of your property.
Title Insurance Protects Your Asset
Title insurance gives you the assurance that possible clouds on title
to the property you are purchasing - which can be discovered from the
public records - have been called to your attention that such defects
can be corrected before you buy. Additionally, it is insurance that if
any undiscovered claims covered by your policy arises out of the past
to threaten your ownership of real estate, it will be disposed of, or
you will be reimbursed exactly as your title insurance policy provides.
Only One Premium
Unlike other forms of insurance, the original premium is your only cost
as long as you or your heirs own the property. There are no annual payments
to keep your Owner's Title Insurance Policy in force.
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To protect possibly the most important investment you'll ever make
- the investment in your home.
With a title insurance policy, you as owner, have an indemnity contract
that will reimburse you for loss in the event someone asserts a claim
against your property that is covered by the policy.
How can there be a title defect
if the title has been searched?
Title insurance is issued after a careful examination of copies of the
public records. But even the most thorough search cannot absolutely assure
that no title hazards are present, despite the knowledge and experience
of professional title examiners. In addition to matters shown by public
records, other title problems may exist that cannot be disclosed in a
search.
What title insurance protects against
Here are just a few of the most common hidden risks that can cause a
loss of title or create an encumbrance on title:
False impersonation of the true owner of the property
Forged deed, releases or wills, Instruments executed under invalid or
expired power of attorney;
Undisclosed or missing heirs; Mistakes in recording legal documents
Misinterpretations of wills Deeds by persons of unsound mind
Deeds by minors
Deeds by persons supposedly single, but in fact married
Fraud
Liens for unpaid estate, inheritance, income or gift taxes
What protection does title insurance provide against
defects and hidden risks?
Title insurance will pay for defending against any lawsuit attacking
your title as insured, and will either clear up title problems or pay
the insured's losses. For a one-time premium, an owner's title insurance
policy remains in effect as long as you, or your heirs, retain an interest
in the property.
What this means to you
The peace of mind in knowing that the investment you've made in your
home is a safe one.
Call Chicago Title
If you have any questions concerning title insurance coverage, please
call a Chicago Title office, or any of our policy issuing agents. We
are here to assist you.
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Initial Request for Title Insurance
An order for title insurance is opened with a title officer who produces
the initial response promptly within 24 to 48 hours. A preliminary report
can be issued with the minimum of information; without even identifying
the buyer or the terms of the sale. It shows the record title as it presently
exists and is only an offer to provide insurance. To order a preliminary
report contact your local Chicago Title representative or office.
On-Site Searching and Examining
Your title officer performs three searches: Property, Name, and Tax searches.
From that information, a preliminary report is created. Our on-site customer
service center expedites the process of obtaining hard copies of recorded
documents. Imaging helps to expedite searches with the ability to obtain
documents on-line.
Technical Review
The skill and expertise of our title officer is the key to providing
you with a useful, accurate title report. Once the report is issued the
review begins by making a technical analysis of the documents of record.
An interpretive view of all recorded matters is made to evaluate their
impact on the title to the property. Among the questions the examiner
asks are: Would any of the recorded matters prevent the buyer from using
the property for its intended purpose? Can antiquated leases be eliminated
from the policy per a review of the current leases?
Inspection Analysis
In anticipation of ALTA coverage, a site inspection is ordered. From
the inspection report, the initial title product is supplemented to show
any encroachments or other off-record matters which would ultimately
impact the title.
Co-Insurance, Re-Insurance, Other Details
If co-insurance or re-insurance is needed for a transaction, we expedite
the confirmation of approval. You, the customer, are never bogged down
or delayed by the action on the part of our title unit. To the contrary,
as a resource and as a facilitator of the transaction, we assume the
responsibility for as many details as possible and are able to direct
you to other resources where necessary (such as for a lost instrument
bond).
We Earn Your Respect with our Skills, Service
and Solutions
We try not to point out impediments to the close of a transaction without
also offering assistance and solutions. By understanding the sometimes
delicate balance of the interests of the parties to a transaction, and
by professionally and courteously handling issues as they arise, we can
capably guide a transaction to a successful conclusion.
Documents in the Title Process
* Preliminary Report
* Commitment - Shows the condition of title in the way we are willing
to issue it.
* Pro Forma - Specimen of what the requested policy, as requested, will
look like. Underwriting issues not completed. Not binding upon the company.
* Policy - Final product. Contract of indemnity between named insureds
and the company.
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Sole Ownership | Co-Ownership | Comparison Chart
HOW YOU TAKE TITLE - ADVANTAGES AND LIMITATIONS:
Title to real property in California may be held by individuals, either
in Sole Ownership or in Co-Ownership. Co-Ownership of real property occurs
when title is held by two or more persons. There are several variations
as to how title may be held in each type of ownership. The following
brief summaries reference seven of the more common examples of Sole Ownership
and Co-Ownership.
SOLE OWNERSHIP
1. A man or woman who is not married.
Example: John Doe, a single man.2. An Unmarried Man/Woman:
A man or woman, who having been married, is legally divorced.
Example: John Doe, an unmarried man. 3. A Married Man/Woman, as His/Her
Sole and Separate Property:
When a married man or woman wishes to acquire title as their sole and
separate property, the spouse must consent and relinquish all right,
title and interest in the property by deed or other written agreement.
Example: John Doe, a married man, as his sole and separate property.
CO-OWNERSHIP
* Community Property:
Property acquired by husband and wife, or either during marriage, other
than by gift, bequest, devise, descent or as the separate property of
either is presumed community property.
Example: John Doe and Mary Doe, husband and wife, as community property.
Example: John Doe and Mary Doe, husband and wife.
Example: John Doe, a married man * Joint Tenancy:
Joint and equal interests in land owned by two or more individuals created
under a single instrument with right of survivorship.
Example: John Doe and Mary Doe, husband and wife, as joint tenants. *
Tenancy in Common:
Under tenancy in common, the co-owners own undivided interests; but unlike
joint tenancy, these interests need not be equal in quantity and may
arise at different times. There is no right of survivorship; each tenant
owns an interest, which on his or her death vests in his or her heirs
or devisee.
Example: John Doe, a single man, as to an undivided 3?4 ths interest,
and George Smith, a single man as to an undivided 1/4th interest, as
tenants in common. * Trust:
Title to real property in California may be held in trust. The trustee
of the trust holds title pursuant to the terms of the trust for the benefit
of the trustor/beneficiary.
The preceding summaries are a few of the more common ways to take title
to real property in California and are provided for informational purposes
only.
There are significant tax and legal consequences on how you hold title.
We bly suggest contacting an attorney and/or CPA for specific advice
on how you should actually vest your title.
CONCURRENT CO-OWNERSHIP INTERESTS
The comparison below is provided for information only, it should not
be used to determine how you hold title. We strongly recommend that you
seek professional counsel from an attorney and/or CPA to determine the
legal and tax consequences of how title is vested.
COMMUNITY PROPERTY JOINT TENANCY TENANCY IN COMMON TENANCY IN PARTNERSHIP
TITLE HOLDING TRUST
PARTIES Only husband and wife Any number of persons (can be husband and
wife) Any number of persons (can be husband and wife) Only partners (any
number) Individuals, groups of persons, partnerships or corporations,
a living trust
DIVISION Ownership and managerial interests are equal except control
of business is solely with managing spouse Ownership interests must be
equal Ownership can be divided into any number of interests equal or
unequal Ownership interest is in relation to interest in partnership
Ownership is a personal property interest and can be divided into any
number of interests
TITLE Title is in the "community." Each interest is separate
but management is unified Sale by joint tenant severs joint tenancy Each
co-owner has a separate legal title to his/her undivided interest Title
is in the "partnership" Legal and equitable title is held by
the trustee
POSSESSION Both co-owners have equal management and control Equal right
of possession Equal right of possession Equal right of possession, but
only for partnership purposes Right of possession as specified in the
trust provisions
CONVEYANCE Personal property (except "necessaries") may be
conveyed for valuable consideration without consent of other spouse;
real property requires written consent of other spouse, and separate
interest cannot be conveyed except upon death Conveyance by one co-owner
without the others breaks the joint tenancy Each co-owner's interest
may be conveyed separately by its owner Any authorized partner may convey
whole partnership property for partnership purposes Designated parties
within the trust agreement authorize the trustee to convey property.
Also, a beneficiary's interest in the trust may be transferred.
PURCHASER'S STATUS Purchaser can only acquire whole title of community;
cannot acquire a part of it Purchaser will become a tenant in common
with the other co-owners in the property Purchaser will become a tenant
in common with the other co-owners in the property Purchaser can only
acquire the whole title A purchaser may obtain a beneficiaries interest
by assignment or may obtain legal and equitable title from the trust
DEATH On co-owner's death, 1?2 belongs to survivor in severalty. 1?2
goes by will to descendants devisee or by succession to survivor On co-owner's
death his/her interest ends and cannot be disposed of by will. Survivor
owns the property by survivorship On co-owner's death his/her interest
passes by will to devisee or heirs. No survivorship rights. On partner's
death, his/her partnership interest passes to the surviving partner pending
liquidation of the partnership. Share of deceased partner then goes to
his/her estate Successor beneficiaries may be named in the trust agreement,
eliminating the need for probate.
SUCCESSOR'S STATUS If passing by will, tenancy in common between devisee
and survivor results. Last survivor owns property Devisee or heirs become
tenants in common Heirs or devisee have rights in partnership interest
but not specific property Defined by the trust agreement, generally the
successor becomes the beneficiary and the trust continues
CREDITOR'S RIGHTS Property of community is liable for debts of either
spouse, which are made before or after marriage. Whole property may be
sold on execution sale to satisfy creditor Co-owner's interest may be
sold on execution sale to satisfy creditor. Joint tenancy is broken.
Creditor becomes a tenant in common Co-owner's interest may be sold on
execution sale to satisfy his/her creditor. Creditor becomes a tenant
in common Partner's interest cannot be seized or sold separately by his/her
personal creditor but his/her share of profits may be obtained by a personal
creditor. Whole property may be sold on execution sale to satisfy partnership
creditor Creditor may seek an order for execution sale of the beneficial
interest or may seek an order that the trust estate be liquidated and
the proceeds distributed
PRESUMPTION Strong presumption that property acquired by husband and
wife is community Must be expressly stated Favored in doubtful cases
except husband and wife case Arise only by virtue of partnership status
in property placed in partnership A trust is expressly created by an
executed trust agreement
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Buying Property Is A Numbers Business
1. A fire destroys only the house and improvements.
The ground is left. A defective title may take away
not the only the house but also the land on which
it stands. Title insurance protects you (as specified
in the policy) against such loss.
2. A deed or mortgage in the chain of title may be a forgery.
3. A deed or a mortgage may have been signed by a person under age.
4. A deed or a mortgage may have been made by an insane person or one
otherwise incompetent.
5. A deed or a mortgage may have been made under a power of attorney
after its termination and would, therefore, be void.
6. A deed or a mortgage may have been made by a person other than the
owner, but with the same name as the owner.
7. The testator of a will might have had a child born after the execution
of the will, a fact that would entitle the child to claim his or her
share of the property.
8. A deed or mortgage may have been procured by fraud or duress.
9. Title transferred by an heir may be subject to a federal estate tax
lien.
10. An heir or other person presumed dead may appear and recover the
property or an interest therein.
11. A judgement or levy upon which the title is dependent may be void
or voidable on account of some defect in the proceeding.
12. Title insurance covers attorneys' fees and court costs.
13. Title insurance helps speed negotiations when you're ready to sell
or obtain a loan.
14. By insuring the title, you can eliminate delays and technicalities
when passing your title on to someone else.
15. Title insurance reimburses you for the amount of your covered losses.
16. A deed or mortgage may be voidable because it was signed while the
grantor was in bankruptcy.
17. Each title insurance policy we write is paid up, in full, by the
first premium for as long as you or your heirs own the property.
18. There may be a defect in the recording of a document upon which your
title is dependent.
19. Claims constantly arise due to marital status and validity of divorces.
Only title insurance protects against claims made by non-existent or
divorced "wives" or "husbands."
20. Many lawyers, in giving an opinion on a title, protect their clients
as well as themselves, by procuring title insurance.
21. Over the last 24 years, claims have risen dramatically.
We Hope You Never Have A Title Claim
Americans have the future in mind when they buy a house, and they purchase
homeowner's insurance to help protect that future. But with home ownership
comes the need to protect the property against the past, as well as the
future.
Title insurance protects a policyholder against challenges to rightful
ownership of real property, challenges that arise from circumstances
of past ownerships. Each successive owner brings the possibility of title
challenges to the property.
When you purchase real property, rely on Chicago Title to protect your
interests. You'll be insured by a company backed by more than 150 years
of successful title operations.
Rely On Chicago Title To Protect Your Investment
Every owner, purchaser and beneficiary, whether by a deed or contract,
should have an insured title.
The entire investment depends upon the quality of title. If you are buying
real estate mortgages, you are paying for a good title and you should
see that you have one. If either fire insurance or title insurance is
omitted, your security is not complete.
Our title policy protects you against unforeseen defects in title that
an abstract or the public records do not show and cannot show?nor any
attorney's opinion includes.
Whether this is your first or fiftieth real estate investment, ask your
real estate agent or broker to specify Chicago Title during your transaction.
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