So, you’ve bought a home – congratulations! You’ve worked
hard to get to this point; a celebration is definitely a must do!
While there should be plenty of rejoicing after you’ve found
the home of your dreams, it’s also incredibly important that you protect your
property rights and understand what is included in your owner’s policy.
These documents might look intimidating, but these policies
are put in place to protect you – so it’s beneficial to know what you’re
For a one-time fee paid at closing, an owner’s policy will
help protect your property rights for as long as you or your heirs own the
Here’s what the owner’s title policy will look like and what
it all means:
The owner’s policy has five sections: covered risks, the
exclusions from coverage, Schedule A, Schedule B, and the Conditions.
This section details the kinds of risks the policy will help
insure against. Some of the most important covered risks include:
- Someone else owning your property
- A defect or encumbrance on your title caused by
- Any liens for real estate taxes or assessments
that have not been paid
- The right of access to and from your land
Be sure to discuss the covered risks that are included in
your policy with your title agent – ask which are subjected to other exceptions
This portion of the document lists the exclusions that are
limited to the coverage of the policy – these are issues that the title company
has nothing to do with.
- Governmental regulations on the land and eminent
- Title defects known to the insured but not
disclosed in writing to the title company prior to the date of the policy
- Effects of bankruptcy law on the transaction
Schedule A is important – it essentially allows your policy
to be valid. It will include the date of the policy, the amount of insurance,
the insured the legal description of the land insured by the policy, and the
This form will list the various exceptions to the title that
the title company found when it performed the title search.This list shows you
(the insured) which items will not be
covered by the title policy, and that the title company will not pay a claim or
defend against a claim based on this list. This list could include:
- Unreleased mortgages on the property
- Restrictions on the use of the property
- Homestead rights or survey issues (if no survey
has been performed)
When you’ve reached this section, you’ve come to the
outlines of the relationship between the insured (you) and the title company.
The first section will define certain terms used in the
policy, like: “Insured Claimant, “Entity,” and “Land,” to name a few.
The second portion will show how a claim under the policy is
handled, including how to provide notice of a claim what is required to prove
loss, and the requirement that the insured (you) must cooperate with the title
company when handling a claim.
With the right title and escrow company, all of your questins can be easily answered. You shouldn’t feel left in the dark! Call your local Alliance Title branch with any questions or concerns you may have.
And check out Home Closing 101 for a deeper look at how title works.