Title Insurance Principles - Insuring Provisions Flashcards
Insuring Provisions
What is a title insurance insuring provision?
It outlines the coverage of the title insurance policy. The provisions specify the risks and potential defects that the insurance policy will protect
Common title insurance insuring provisions
Defects in Title
Forgery and Fraud
Liens and Encumbrances
Invalidity or Unenforceability of Mortgage
Unmarketability of Title
Access and Right of Way Issues
Covenants, Conditions, and Restrictions (CC&Rs)
What section of the title insurance policy lists risks that are covered by the policy?
Covered Risks
What are the standard covered risks in an owner’s policy?
unmarketable title
insurers title/ownership per vesting clause
lack of legal access
defects in title or liens or encumbrances on title
fraud
lack of authority to convey
unpaid taxes
unpaid liens
defective or invalid deeds
lack of competency
deed not properly recorded
What are the standard covered risks in a lender’s policy?
unmarketable title
vesting
lack of legal access
defects in title or liens or encumbrances on title
lack or priority of lien over liens for services, labor,
unenforceability of lien or assignability of lien
insures against the unenforceability of an assignment of mortgage
deed or deed of trust not properly recorded
What section of the title insurance policy contains limitations on coverage and notes items that are outside of title company’s control?
Exclusions
List the standard policy exclusions?
governmental policy powers
governmental regulations on land and eminent domain
title matters created or agreed by the insured
risks known by the insured
defect or title issue that is created or attaches to the property after the date of policy
the effects of bankruptcy law on the transaction or creditor’s rights
What is in the conditions section?
Outlines the legal relationship between the insured and the title insurance company. It further defines insured, insured claimant, knowledge, land, public records and other important terms to avoid ambiguity
Short Form Residential Loan Policy
a type of title insurance policy designed specifically for residential real estate transactions, particularly those involving mortgage loans. It protects property lenders from financial loss due to defects in the title of the property
Key components of Short Form Residential Loan Policy
Purpose - primary purpose is to provide title insurance coverage to the lender in a residential mortgage transaction
Simplified Format- designed for residential transactions to simplify the issuance process. It saves time and money
Coverage for the lender - protects the lender’s interest in the property. Covers lender against financial loss arising from covered title defects that may affect the mortgage or security interest of lender
Common Covered Risks - covers common risks such as defects in the title, liens, encumbrances, forgeries and fraud that may impact the lender’s security interest
Exclusions and Exceptions - short form policy may have exclusions and exceptions. These specify certain risks or issues that are not covered by the policy
Short Form Loan Policy only protects who?
The property owner
Alta short form loan policy application is
only issued on 1-4 family residential properties
it applies to platted subdivisions - not acreage
there must be existing improvements on property NOT for construction loans
Condominiums and townhouses are insurable
Access to a public road must appear in the land records
The short form policy does not apply to
construction loans
raw land or unimproved property
commerical property
multi-family residential (more than 1-4 family units, unless individual condominium or townhouse)
