Why do I need title insurance when I purchase or are selling a property?

When buying or selling real estate in Grand Junction CO it is very important to have a title insurance policy and to review it before moving forward in a transaction. With a title insurance policy, you as owner, have coverage  that will reimburse you for loss in the event someone places a claim against your property that is covered by the policy.When a title policy is ordered the title company will review the public records throughly and create a list of requirements and exceptions that affect the coverage of the title policy. For example, if a seller had work completed on the property and didn't pay the contractor the contractor could then place a mechanic's lien on the property. This lien would have to be satisfied before closing so that the title to the property could be conveyed free and clear. Other requirements might include satisfying a release of deed of trust on the current seller's mortgage and a affidavit and indemnity agreement signed by the seller stating that no other issues affect the property that wouldn't be disclosed by a public records search. Like most insurance policies there are exceptions that they won't cover. These should be of particular interest to the buyer because down the road you can't use those items to make a claim since they were disclosed to them before the title policy was issued. These items might include right of ways, homeowners associations covenants, or other rights that someone might have to the property that was disclosed in the public record. An example of this might be that if you build a shed on a known right of way for a utility company and the utility company needed to tear down the shed to access that right of way. The new owner likely wouldn't be able to make a claim for the damage since it was disclosed in the title commitment before transfer of title. It is also wise to get a survey or improvement location certificate and provide it to the title company prior to closing so that they can investigate any possible encroachments or boundary issues not shown by public record. Title insurance will pay for defending against any lawsuit attacking your title as insured, and will either clear up title problems or pay the insured's losses. For a one-time premium, an owner's title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property. A few of the most common hidden risks that can cause a loss of title or create an encumbrance on title could also be false impersonation of the true owner of the property, deeds by persons supposedly single, but that are in fact married, fraud, undisclosed or missing heirs, and mistakes in recording legal documents. Buyers should also be aware that a title examination will be looking at any judgments or adverse items on them, so it is important to have those items taken care of when purchasing a property as well. Navigating the title policy can be a little tricky, so be sure to review it with your real estate professional, title examiners, and an attorney should you not be clear on what exactly is being covered and conveyed at closing.