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.