Why Bother With Title
Insurance?
When you buy a home
or land, you are buying many things, including the land, the
improvements (house, well, septic, electrical system, etc.),
and the entire paper title history of ownership. Before paying
the seller the purchase price, you can inspect the land by
walking around it or having a surveyor locate its boundaries.
You can inspect the house by having qualified contractors
look over the electrical/plumbing/heating systems or examine
the roof for leaks. Inspecting the paper title history requires
a review of all recorded documents (at the Register of Deeds)
ever signed by any owner of the property, any one or more
of which documents could still affect your use of the property.
Examples of such documents include easements, oil and gas
leases, oil and gas reservations, federal and state tax liens,
missing signatures on deeds, there are many more. The existence
of any one of these title issues could impact your use and
even ownership of the property you are acquiring. The title
insurance “inspection” will disclose to you before
you buy any such issues that might exist. Your pre-knowledge
of such title issues will allow you to have the seller fix
or clear up the title issues or if the seller is unable to,
you can back out of the deal and go find better property.
Title insurance is your inspection and the title insurance
company is your inspector.
Glossary of Terms
Abstract of Title:
A condensed history or summary of all transactions affecting
a particular tract of land.
Access: The right to enter and leave a tract of land from
a public way. “Oftentimes the right to enter and leave
over the lands of another.”
Acknowledgment:
The act by which a party executing a legal document goes before
an authorized officer or notary public and declares the same
to be his voluntary act and deed.
Acre: A tract of land 208.71 feet square and containing 43,560
square feet of land.
Administrator: A person appointed by a probate court to settle
the affairs of an individual dying without a will. The term
is administratrix if such a person is a woman.
Affidavit: A sworn statement in writing.
Air Rights: The right to ownership of everything above the
physical surface of the land.
Assessment:
The imposition of a tax, charge or levy, usually according
to established rates.
Assessor: A public official who evaluates property for the
purpose of taxation.
Assignee:
One to whom a transfer of interest is made. For example, the
assignee of a mortgage or contract.
Assignor:
One who makes an assignment. For example, the assignor of
a mortgage or contract.
Attorney in Fact: One who holds a power of attorney from another
allowing him to execute legal documents such as deeds, mortgages,
etc. on behalf of the grantor of the power.
Bankrupt:
A person, who, through a court proceeding, is relieved from
the payment of all his debts after surrender of all his assets
to a court appointed trustee.
Chain: A
term of land measurement being 66 feet in length.
Chain of Title: A term applied
to the past series of transactions and documents affecting
the title to a particular parcel of land.
Clear Title: One which is not encumbered or burdened with
defects.
Closing: Also known as “escrow”
or “settlement.” The process of executing legally
binding documents such as deeds and mortgages most commonly
associated with the purchase of real estate and the borrowing
of money to assist in the purchase.
Clouded Title: An encumbered title.
Condominium: A system of individual fee ownership of units
in a multi-unit structure, combined with joint ownership of
common areas of the structure and land.
Contract for Deed: An agreement
to sell and purchase under which title is withheld from the
purchaser until such time as the required payments to the
seller have been completed.
Convey: The act of deeding or transferring title to another.
Conveyance: An instrument
by which title to property is transferred; a deed.
Correction Deed: A document
used to correct an error in a previously recorded deed.
Covenant: An agreement written
into deeds and other instruments promising performance or
non-performance of certain acts, or stipulating certain uses
or non-uses of the property.
Deed: A
written document by which the ownership of land is transferred
from one person to another.
Dower: The legal right of a widow to a portion of her deceased
husband’s real property.
Easement: An interest in
land owned by another that entitles its holder to a specific
limited use, such as laying a sewer, putting up electric power
lines, or crossing the property.
Egress: The right to leave a tract of land. “Often used
interchangeably with access.” (See Access)
Exception: In legal descriptions
that portions of lands to be deleted and excluded. “The
term is often used in a different sense to mean an objection
of title or encumbrance on title.”
Executor: A person appointed
by the probate court to carry out the terms of a will. “The
term is executrix if such a person is a woman.”
Financing Statement:
A document prepared for filing with the Register of Deeds
or Secretary of State indicating that personal property or
fixtures is encumbered with a debt.
Fixtures: Any item of property
so attached to real property that it becomes part of the real
property.
Foreclosure: The procedure by which a persons property can
be taken and sold to satisfy an unpaid debt.
Grantee:
A person who acquires an interest in land by deed, grant,
or other written instrument.
Grantor: A person, who, by
a written instrument, transfers to another interest in land.
Guardian: One appointed by
the court to administer the affairs of an individual not capable
of administering his own affairs.
Heir: One
who might inherit or succeed to an interest in land under
the rules of law applicable where an individual dies without
leaving a will.
Ingress:
The right to enter a tract of land. “Often used interchangeably
with access.” (See Access)
Joint Tenancy:
Where two or more persons hold real estate jointly for life,
the survivors to take the interest of the one who dies.
Judgment: A decree of a court.
“In practice this is the lien or charge upon the lands
of a debtor resulting from the Court’s award of money
to a creditor.” (See Judgment Lien)
Judgment Lien: The charge upon the lands of a debtor resulting
from the decree of a court properly entered in the judgment
docket.
Land Contract:
See Contract for Deed.
Lease: A grant of the use
of lands for a term of years in consideration of the payment
of a monthly or annual rental.
Lessee: One who takes land
upon a lease.
Lessor: One who grants land
under a lease.
Lien: A hold, a claim or
a charge allowed a creditor upon the lands of the debtor.
“Some examples are mortgage liens, judgment liens, mechanic’s
liens.”
Life Estate: A grant or reservation
of the right of use, occupancy and ownership for the life
of an individual.
Lis Pendens: A notice recorded
in the official records of a county to indicate that a suit
is pending affecting the lands where the notice is recorded.
Lot: A measured parcel of
land having fixed boundaries.
Mechanic’s
Lien: A lien allowed by statute to contractors, laborers
and materialmen on buildings, or other structures upon which
work has been performed or materials supplied.
Metes and Bounds: A description
of land by courses and distances.
Minor: One who because of
insufficient age or status is legally incapable of making
contracts.
Mortgage: An instrument used
to encumber land as a security for a debt.
Mortgagee: A designation
for the mortgage lender on lands.
Mortgagor: A designation
for the mortgage borrower on lands.
Notary:
One authorized to take acknowledgments. (See Acknowledgment)
Ownership:
The right to possess and use property to the exclusion of
others.
Patent:
A document or grant by which the Federal or State government
originally transferred title to public lands to an individual.
The first in the series of transfers by which the title comes
down to present owners.
Personal Property: A right or interest in things of a temporary
or moveable nature. Anything not classed as Real Property.
Plat or Plot: A map representing
a piece of land subdivided into lots with streets shown thereon.
Power of Attorney: An instrument
authorizing another to act on one’s behalf as his agent
or attorney.
Quiet Title:
An action in proper Court to remove record defects or possible
claims of other parties named in the action.’
Quit Claim Deed: A legal
instrument used to convey whatever title the grantor has.
It contains no covenants, warranties nor implication of the
grantor’s ownership.
Range: A
part of the government survey, being a strip of land 6 miles
in width, and numbered east or west of the principal meridian.
Real Property: Land and that
which is affixed to it.
Redeem: Literally “to buy back.” The act of buying
back lands after a mortgage foreclosure, tax foreclosure,
or other execution sale.
Right-of-Way: The right which
one has to pass across the lands of another. An easement.
Second Mortgage:
A second loan on real estate that already has a mortgage.
It is subordinate to the first mortgage. Usually of shorter
term and often at a higher interest rate.
Section or Section of Land: A parcel of land comprising one
square mile or 640 acres.
Sheriff’s Deed: A deed
issued as a result of court ordered foreclosure sale.
Subsurface Right: The right
of ownership to things lying beneath the physical surface
of the property.
Survey: The process of measuring
land to determine its size, location and physical description
and the resulting drawing or map.
Tenancy in Common:
An estate or interest in land held by two or more persons
having equal rights of possession and enjoyment but without
any right of survivorship between the owners.
Tenant: Any person in possession
of real property with the owner’s permission.
Title: The evidence or right
which a person has the ownership and possession of land. “Commonly
considered as a bundle or history of rights.”
Title Insurance: Insurance
against loss or damage resulting from defects or failure of
title to a particular parcel of real property.
Title Search: An examination
of public records, laws and court decisions to disclose the
current facts regarding ownership of real estate.
Township: A division of territory
6 miles square, containing 36 sections or 36 square miles.
Tract: A particular parcel
of land.
Trust: A property right held
by one for the benefit of another.
Trustee: A person holding
property in trust.
Vendee:
A purchaser of real property under land contract.
Vendor: A seller of real
property under land contract.
Warranty:
An agreement and assurance by the grantor of real property
for himself and his heirs, to the effect that he is the owner
and will be responsible.
Will: A written document
property witnessed, providing for the distribution of property
owned by the deceased.
Zoning:
The right of a municipality to regulate and determine the
compatible character and use of property.
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