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newport news title company
The Need and Value 21 Reasons for Title Insurance
What The Policy Covers What The Title Search Uncovers
How You're Protected Possible Title Defects | Risks
The Premium Cost Who is Covered: Lenders
Who is Covered: Owners Loan Refinance | Re-Insure

Title Insurance

Understanding the Need and Value

You've decided to purchase a home and hope to take possession as soon as possible. The terms have been agreed upon and all the financial arrangements have been made. But there's one important detail remaining. Before the transaction can close, a title search must be performed.

"Title" is a bundle of rights in real property. A title search is the process of determining from the public record just what these rights are and who own them. The search determines that the person who is selling the property really has the right to sell it, and that the buyer is getting all the rights to the property (title) which he or she is paying for. A title search is made to assure the buyer that a valid, insurable title has been purchased.

You are protected against any recorded defects, liens, or encUmbrances upon the owners, easements, restrictions or court actions which 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 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.

The title to the property that your 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 public records. 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. Your title policy provides coverage for such claims. This is the second benefit you receive from title insurance.

Title Insurance Coverage

What the Policy Covers

Once the title search has been concluded and curative work to resolve any issues has been completed, the title insurance policy is issued. Title insurance protects policy owners against covered financial losses associated with claims against the title being rejected by the subsequent buyer of your property due to pre-existing title defects and covers losses that may arise after the property is sold if title covenants were included in the sales contract.

Read and Know Your Policy Coverage

This includes attorneys fees and costs associated with defending the title and insures that the policy holder is the legal owner and has access to the property. Since the final title insurance policy may have some coverage exceptions (such as conditions, utility and other easements or set-back requirements), policy owners must carefully read the coverage information for their specific policy provisions.

Title Search

What the Search Steps Uncover
Before You Close the Transaction

Chain of Title -- A history of the ownership of a particular property: who bought it and sold it, and when. The information is derived from public records, usually a County Clerk's Office, or obtained from "title plants" privately owned and maintained by title companies. Both sources contain essentially the same history information.

Tax Search -- This search reveals the present status of real estate taxes against the property, whether the taxes are current, past due, or unpaid from previous years. Also, the existence of any special assessments against the land are indicated. Title insurance protects the buyer against loss from unpaid and past due taxes and assessments.

Report on Possession -- In the eyes of the law, any buyer of real estate is assumed to have notice of all matters properly shown in the public records as well as any information that an actual inspection may reveal.

Judgement and Name Search -- An extremely important part of the title search is to determine that a title is not subject to unsatisfied judgments against the seller or previous owners. A judgment against a person named 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. If a judgment is discovered that constitutes a defect in the title, it is pointed out, and the seller must then eliminate it before the title of the new buyer can be insured free and clear of that judgment.

Title Insurance

How You're Protected

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.


A One-Time Premium

Home buyers are welcome to shop policy coverage and rates before making their final choice. Home buyers should ask about the title insurance options available to them and freely discuss the provisions and exceptions of any title insurance coverage they might be considering. Whatever they ultimately decide about title insurance, it should always be an informed choice. Unlike other types of insurances that require ongoing payments, title insurance covers things that happened in the past (prior to the closing) that could affect the status of the property's title. You pay only one premium for title insurance at the time of the closing and your policy is good for as long as you or your heirs own the property.

Who is Covered

Two Types of Title Policies

Lender's Title Insurance | Owner's Title Insurance

Lender's title insurance policies and Owner's title insurance policies cover many of the same things. In both cases, the policy holders are protected from title risks such as title search errors, claims by missing heirs or ex-spouses, forged signatures in the chain of title, and many other title problems that could go undetected before the closing. Attorney fees and settlement costs are also covered up to the policy's limit.

Lender's (for Loan) Title Policies are required by lenders and paid for by the borrower(s) at the closing. However, these policies only protect the lending institution in the event a title problem is later uncovered and causes a financial loss. Lender title insurance covers institutions up to the amount of the mortgage loan associated with the property, but makes no provision for the borrower's losses.

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 valit 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 different from those of a buyer's policy, so the buyer shold obtain his own policy, often issued simultaneously with the lender's policy at a discount.

Owner's Title Policies are not required for home buyers, and in many jurisdictions, an Owner's policy is not offered during the mortgage process. As a result, home buyers are left without title risk coverage and often don't know they had a choice. Without an Owner's policy, home buyers must pay for title curative work out-of-pocket and the equity they have in their property can be at risk. However, with an Owner's title insurance policy in effect, the home owner's investment is fully protected since the policy usually covers buyers up to the full sale price.


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21 Reasons
For Title Insurance

1. A fire destroys only the house and improvements. The ground is left. A defective title may take away not only the house, but also the land on which it stands.

2. A deed or a mortgage in the chain of title may be a forgery.

3. A deed or a mortgage may have been signed by a person underage.

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 by a person other than the owner, but with the same name as the owner.

6. A deed or a mortgage may have been made under a power of attorney after its termination and would, therefore, be void.

7. The testator of a will might have had a child born after the execution of the will, a fact that must entitle the child to claim his or her share of the property.

8. A deed or a 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 property or an interest therein.

11. A judgment 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 attorney's 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 a 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 past 24 years, claims have risen dramatically.

mortgage title insurance information

Title Insurance
Provides Against
These Common Defects or Hidden Risks

Fraud | False Impersonation of the true property owner

Forged Deed, Releases or Wills; Instruments executed under invalid or expired Power of Attorney

Deeds by persons supposedly single, but in fact married

Misinterpretations or Improper Probation of wills or deeds

The Competence of a grantor of deed is called into question by persons of unsound mind; under undue influence; or by minors

Undisclosed or missing heirs: Claims against a property may come from missing hiers or heirs born after the execution of a will; the dower or courtesy rights of spouses of former owners; claims from ex-spouses; or even from government or corporate entities

Mistakes in recording legal documents

Liens for unpaid estate, inheritance, income or gift taxes

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When Refinancing Your Mortgage Loan

A Separate Policy Insures
its Validity

You need to re-purchase title insurance when you refinance your mortgage, even though you may have done so when you first bought your home -- even if there is no change in ownership. The reason is because the lender requires validity and enforceability of your loan.

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 when it is refinanced. For example:

w You may have taken out a second mortgage on the home that could threaten the priority of the new lender's mortgage.
w There could be legal judgments against you or a mechanic's lien against the property by a supplier who wasn't paid for home improvements.
w 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 provides for the validity of these securities.

For your refinance transaction with title insurance from Patrick Henry Title Company, you may qualify for a special title insurance rate based on the loan amount. Call us for details.


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