Title Insurance in Arizona:
WHAT IS TITLE INSURANCE?
A policy of title insurance is issued to a buyer and/or a lender to guarantee to the insured party or parties, "Free and Clear" title to the property being insured, from the beginning of time until the date and time the buyer acquires title to the property, or in the case of a lender's policy until the date and time the lender's loan document is recorded against the property. "Free and Clear" is defined as there being no loans, liens, encumbrances, back taxes, easements or covenants, conditions or restrictions against the property that were not disclosed on Schedule 'B' of the commitment for title insurance issued by the insuring company.
Title insurance also provides protection coverage for certain losses due to defects in the title that occurred prior to your ownership. The Seller can give only those rights that previously have been received with "good title." Title insurance protects against defects such as prior fraud or forgery that might go undetected until after closing and possibly jeopardize your ownership and investment.
WHY IS TITLE INSURANCE NEEDED?
Title insurance assures the new Buyers that they are acquiring marketable title from the Seller. It is designed to eliminate risk or loss caused by defects in title from the past. Title insurance protects the interest of the mortgage lender as well as the equity of the Buyer for as long as they or their heirs have any interest in the property. The policy protects the buyer's or the lender's investment in real estate, including their legal defense against any claim or claimant. If a claim is valid, the title insurer will either resolve the title problem or pay the insured's losses.
WHEN IS THE PREMIUM DUE?
It is a one-time premium which is paid at the close of escrow. It is customary for the Seller to pay for the Owner's Policy. If there is a new loan, the Buyer pays for the Lender's Policy. The policy has a perpetual term and provides coverage for as long as you or your heirs retain an interest in the property, or are in a position to suffer a loss.
There are many title issues that could arise and cause you to lose your property or your mortgage investment. Even the most careful search of public records may not disclose the most dangerous threat, called 'hidden risks'. These issues may not be uncovered until years later, and can result in the loss of your property, or an expensive lawsuit. Without title insurance from a reputable and financially solvent company, your title could be worthless. With the proper insurance, you rights will be defended in court. Here are some of the issues that occur most frequently: