What is a title?

When you purchase a home, you are really purchasing the title to the real estate. Title to your real estate is comparable to the title to your car--because you own it, you have the legal rights to use it, control it, improve it, share it, use it as collateral for a loan, sell it, devise it in your will, give it away as a gift, and even destroy it. Title, then, is a unity of all of your legal ownership rights in property.

What is title insurance?

Title insurance protects against loss from defects in title that may exist, such as fraud, forgery, unknown heirs, liens and other problems. If you do not purchase owner's title insurance at the time you purchase your home, and your title were challenged in the future, you would bear the cost of defending your title, and you could even lose your home. Your owner's title insurance policy with First American would require First American to defend against certain covered challenges to your title, and First American would be required to either clear up title problems or pay your losses. For a one-time premium generally paid at closing, an owner's title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property. Moreover, your mortgage lender will require a loan policy of title insurance to protect its interest in the value of your property. In both Pennsylvania and New Jersey, one premium will generally cover the cost of both the owner's and loan policies.

What types of policies are issued?

An institutional lender will generally require a title insurance loan policy, under which First American takes on a financial liability generally of the loan amount. You should also obtain an owner's title insurance policy carrying a liability amount equal to the ultimate value of your property. (See our Comparison of Coverages for the Basic Owner's Policy versus the Enhanced Owner's Policy.)

What is a title search?

A title search is a detailed and extensive examination of public records concerning a particular property. These records include deeds, court records, property and name indices, and other public documents.

What are closing costs?

Closing costs are fees charged to close a real estate transaction. They may include, but are not limited to, title insurance, survey fees, property taxes, attorney fees, real estate agent fees, mortgage broker fees, and lender fees. Prior to closing, you should review your HUD-1 Settlement Statement, the document at closing that discloses all closing costs, to ensure that the calculations are correct.

Are title charges negotiable?

No. Title insurance coverage in Pennsylvania and New Jersey is regulated by both states' respective Departments of Insurance. Therefore, you should choose the title insurance provider based on its reputation for service. That being said, charges other than the premium may vary among providers, and if you do choose to compare costs, be certain to inquire about any additional miscellaneous fees.

What is involved in insuring title?

Below is a summary of the typical title insurance process:

• First American's employee or independent search contractor searches the courthouse records to uncover any liens and other encumbrances on title.
• First American then examines this search and summarizes it in a form known as a commitment.
• Next First American prepares for closing by gathering tax certifications, payoff figures for mortgages, judgments and other liens affecting title, water and sewer bills, lender fees and all other real estate fees relevant to the closing. These charges are placed on a HUD-1 Settlement Statement to be signed at closing.
• After these preparations, the closing takes place. A closing, which may also be known as "settlement" or "escrow," is the event where title to property is transferred from seller to buyer. It involves the completion of the necessary paperwork and financial exchanges to finalize the conveyance. In most cases, a First American closing representative oversees this process.
• After closing, First American records the executed recordable documents (e.g. deed and mortgage) at the courthouse in the county where the property sits, and issues the title insurance policies to you and your lender.