TITLE INSURANCE - TIPS FOR CONSUMERS
Definition of Title Insurance: Title insurance protects against losses arising from unknown or undisclosed defects in the past chain of title. A defect on the title is generally referred to as a "cloud" on title. Unlike other property & casualty lines of business (auto, home, etc) title insurance insures against past events, not future events. In exchange for a one time paid premium, title insurance companies assume the risk that title to a parcel of real estate is as it is stated to be in the policy. A title insurance policy indemnifies the buyer or lender against losses suffered if title to the property is not as the policy states it to be.
The following are a list of tips consumers should know about title insurance, title companies and title agents. If you are preparing to sell, buy or refinance property, these may be of use to you.
�� Consumers may shop title insurers for the most competitive rates. Typically the seller’s broker will select a title entity with which they wish to do business, but consumers are not required to use this title entity. Consumers should be aware that realtors and title agents may have ownership interests in affiliated title and/or real estate and/or mortgage companies. These "affiliated business arrangements" must be disclosed.
�� The premium rates charged by a title company are required to be filed with the 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 public inspection. Section 10-11-118, C.R.S. requires the title entity to make its charges available to the public upon request.
�� Title entities that prepare closing documents are required to prepare such documents in accordance with the closing instructions provided by the lender, broker or both.
�� Lenders typically require a lender’s title insurance policy when providing a loan. The lender’s instructions and requirements must be met before they will fund a loan. The lender typically dictates the extent of coverage that is provided in the lender’s title insurance policy.
�� Section 10-11-106, C.R.S. requires a title company to do a thorough title search to ensure clear title. If a cloud on title is found, the company will usually specify remedial measures (i.e. requirements) that must be completed prior to, or at the time of, the closing. Alternatively, the company may insure over the cloud or except it out from coverage. In other words, the insurer will attempt to make the consumer whole by ensuring that they will indemnify the buyer for any loss that occurs because of the cloud, or the insurer will list the cloud on the list of exceptions for which they will not provide coverage. Consumers are advised to read the exceptions page of their title commitment and policy carefully.
�� If a title entity is responsible for the recording of documents, it is responsible for doing so in a reasonable amount of time. State law requires lenders to record releases of Deeds of Trust within ninety days after the satisfaction of the indebtedness.
�� It is illegal for a title entity to give or receive anything of value for the referral of title insurance business, other than receive payment for the fair market value of the product. Please contact the Division if any person involved in the real estate transaction forces you to use a particular title insurance entity, or offers you a rebate or any "side deal" if you agree to use a particular title entity.
COMPLAINTS AGAINST TITLE INSURERS AND TITLE AGENCIES MAY BE SUBMITTED TO THE DIVISION OF INSURANCE VIA THE WEBSITE, US MAIL OR FAX.
|