Title Insurance protects against financial loss that could result from discovery of a previously unknown title defect or ownership rights. Defects range from an unreleased mortgage, tax liens, forged documents, unknown heirs, or even clerical error. Ownership rights can be missed or mis-represented due to forgery, fraud or defects in the public record. These findings can disrupt the free and clear standing of an owner's title rights to the property. Defects can lead to litigation, leaving the owner exposed to the costs and fees associated with any proceedings, as well as risking loss of rights in the property.
A title search examines the historical records and chain of ownership, concerning a parcel of land. The search permits all parties to a transaction, information pertaining to recorded ownership interests that apply to the land, as well as any known defects or liens made against the property ahead of the sale and conveyance. This search includes several County and Federal offices and courts.
A title insurance policy transfers any assumed risk of defects from the insured owner to the title insurance company. Title coverage insures that damages or financial loss incurred as a result of a previously unknown defect or ownership rights are the responsibility of the issuing company, not the owner.
Title insurance consists of a one-time premium assessed at the time of purchase. In Ohio, the costs for the policy are regulated by the state and the filed rates must be charged by any and all issuing agents in the state. The final cost is based upon the property sale price for the owner's policy and loan amount for the lender's portion of coverage. Purchase of both lines of coverage, caps the cost of the lender's portion at $100 so long as the loan amount does not exceed the purchase price. The policy remains in force for as long as the owner, or his/her heirs own the property and/or are further obligated under warranties of sale.
Title companies perform a search to be able to address known defects and to be able to insure title. The search is not a guarantee as to all relevant facts relating to the title and is only one of the necessary steps in being able to insure. The best title search is ultimately, only as accurate as the information that can be located on the public record. These searches cannot account for unknown fraudulent activity, past clerical errors, recording errors, or gaps in reported liens or judgments. A title company can provide assurances of the best and diligent search but, through search alone, cannot guarantee a free and clear issuance of title. Title Insurance provides a policy of indemnity against future claims made against the owner and transfers the risk and costs associated with such claims to the issuing underwriter.