Frequently Asked Questions
Key Closing Process for the buyer & seller:
What is Title Insurance?
A home is often the largest single investment any of us ever make. Title insurance protects against loss of value from defects that may exist in the title, or arguments made by others that such defects exist.
Title insurance usually covers and protects against four types of "hidden" risks: errors, liens, ownership claims, and invalid deeds. If a claim is made against your property, the title insurance company will negotiate with the other party to settle the claim, defend you in court if necessary, pay any incurred legal costs, and satisfy any covered claims. Having title insurance can save you time, money, even your home.
What exactly does Title Insurance mean?
A “Title” is all of your legal rights to own, occupy, use and sell a piece of land. The title reflects all previous ownerships and transfers, including rights previously granted by other parties, such as mortgages and easements. When you purchase property, this legal right is usually documented in the form of a deed recorded at the local courthouse.
Almost everyone is familiar with some form of insurance coverage: insurance on your car, your life, medical/dental insurance or fire insurance on your home. Title insurance for real estate provides protection against loss if a defect is found in the title to real property. Unlike the above mention insurance products, Title Insurance is purchased for a one-time premium, paid in most cases at closing.
What types of Title Insurance exists?
There are two types of title insurance policies: Owner's or Borrowers policy and Lender's or "Mortgagee's" policy. An Owner's Policy is issued in the amount of the purchase price and insures the title to the property for as long as the owner or their heirs own the property or have liability through warranties of title. A Mortgagee's Policy insures the lender in the amount of the loan against the invalidity or unenforceability of the new mortgage. The policy decreases as the loan is paid down and expires upon payment in full of the loan. Separate title insurance policies protect different interests. Individuals assuming that they are adequately covered without the protection of title insurance may learn a costly lesson.
It is important to know that the mortgagee policy does not provide coverage for the owner. Also, a prior owner's policy will not protect a new buyer. Consider, for example, what would happen if upon the purchase of a new home the buyer were to rely on their seller's owner's policy and later discovered a previous undisclosed interest or that a large judgment or tax lien was filed against that seller after he took title to the property. Or, suppose an individual impersonated your seller's wife in order to sign the deed. The only way to cover these catastrophes is to purchase title insurance coverage.
What does Frontier Title Company search?
Before the closing of a loan or sale of property takes place, the public records are searched and examined to determine ownership, limitations to that ownership, encumbrances and any adverse matters affecting title to the property. These records are searched by examining the official courthouse records, where all recorded documents, judgments, liens, tax assessments (such as street or sewer), special taxes, and other matters, such as divorce and bankruptcy, are filed.
The results of this examination will then be provided in a preliminary title report or "commitment" to insure the property. A commitment is a binding contract which reflects the current status of title before a loan or sale of property to the new owner. This commitment binds the Company to issue its title insurance in favor of the insured as owner or mortgagee of the property being searched, subject to certain conditions and stipulations. If there are serious problems found in the chain of title, the title insurer will report those matters and also exclude them from coverage. Buyers and lenders know there are some limitations which should be removed such as the paying off and release of a prior mortgages or judgments. If these items are not removed, they will continue to adversely affect the property and the priority of the new owner and their interests after closing. Sometimes problems are discovered and a title company may choose to "insure over" the matter in order for the transaction to proceed as planned.
What risks are covered with Title Insurance?
Subject to its terms and conditions, a title policy covers the following title risks, if they affect title to the insured property on the policy date:
Someone else owns an interest in the title.
A document is not properly created, executed, witnesses, sealed, acknowledged, notarized or delivered.
Forgery, fraud, undue influence, duress, incompetency, incapacity or impersonation.
A document that was executed under falsified, expired or otherwise invalid power of attorney.
Defective recording, indexing or filing of any document.
Lack of legal right of access to and from the land.
There are restrictive covenants limiting the use of the land.
Failure of any person or entity to authorize the relinquish, transfer or conveyance of property
There is a lien on the title because of:
A mortgage, deed or trust
A judgment, tax or special assessment.
Others have rights arising out of leases, contracts, or options.
Someone else has an easement on the land.
Title is unmarketable; this impedes an individual or entity from performing a contract to purchase, a lease or from taking out a mortgage loan.
You are forced to remove your existing structure other than a boundary wall or fence because:
It extends onto adjoining land or onto any easement
It violates a restriction shown in the policy.
Other defects, liens or encumbrances.
If the title to a property is cleared before I buy or mortgage a property, why do I need title insurance?
No matter how careful or efficient, human beings can make mistakes which could ultimately result in financial loss if not insured against. Items such as missed judgments, tax liens or a prior mortgage may be missed or omitted from a title search or commitment. A forged or fraudulent deed in the chain of title or an undisclosed heir's interest may surface at a later date. An owner's or lender's interest can best be protected from these circumstances with title insurance.
Why do I need title insurance when refinancing property?
Title insurance on a refinanced mortgage is usually offered at a reduced rate, and it assures your lender that you actually own the property. It insures that no one else has a preemptive position in front of the lender, and if someone does, the Title Company pays the lender’s losses.
Why do I need title insurance on a newly built property?
Even if your home itself hasn’t had previous owners, the land that it stands on has. Your policy insures that you are the owner of a specific piece of property. It clarifies the property rights and insures that your builder hasn’t used it as collateral on another loan, that there are no unidentifiedeasements affecting your property, and that no problems will surface to harm the property at a later date.
Where is Frontier Title able to issue Title Insurance?
Frontier Title Company is licensed, and offers Title Insurance in the State of Illinois. We provide real estate closings throughout the state, and focus primarily on the Central Illinois Region.
If I need to bring money to the closing, what types of funds will Frontier Title accept?
Frontier Title Company is has a very flexible policy when collecting funds for Real Estate closings. We accept Certified Checks/Official Checks, Money Orders, and Wire Transfers. Please remit all checks payable to Frontier Title.