How does title insurance affect a home buyer/seller?
Question: How does title insurance affect me as a home buyer or seller?
Answer: Title Insurance protects you from losses arising from the unknown history of the property. Your lender typically requires a lender’s title insurance policy when providing you with a home loan. In most cases lender’s instructions and requirements must be met before they will approve the loan. The reasoning for title insurance is that when a home is sold, the deed transfers the right of ownership from the seller to the buyer. It is important that the title to your property is valid. You want to be sure that no other person can claim the title to your property. It’s also important that the new deed be recorded by the county recorder. This provides legal notice that the property has been “conveyed,” which is the same as saying it’s sold. The word conveyed, however, applies only to real estate.
For a one-time fee, a title insurance company will do the necessary research and then provide the new owner with a document insuring that the title to the property is clear of any other claims. If there are other claims, the title company will explain the claims and how to get the necessary insurance.The premium rates charged by a title company must be filed with the Colorado Division of Insurance. Likewise, the closing and settlement fees charged by a title company, or title agency, are required to be filed with the Division of Insurance. These rates and fees are available for anyone to look at.If a title company or agency is responsible for the recording of documents, it must record them in a reasonable amount of time. Colorado law requires lenders to record releases of Deeds of Trust within 90 days after satisfaction of the indebtedness.
It is illegal for a title company to give or receive anything of value for the referral of title insurance business, other than payment for the fair market value of the product. For more information about Title Insurance, the Colorado Division of Insurance is your best source. The Division licenses all producers and agencies and regulates all insurance entities. To contact the Division of Insurance, call the Consumer Affairs Section at (800) 930-3745 or visit their website at http://www.dora.state.co.us/insurance.This column, brought to you by the COLORADO ASSOCIATION OF REALTORS, is meant as general information. Consult your local Realtor regarding specifics about home buying or selling.
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