Title insurance protects against losses due to past events not future events. It provides protection against problems that are not know to or that were not discovered by the insured prior to their ownership. In the event that a “cloud” or lien is discovered after closing, the title insurance agent and underwriter will cooperate to make certain that the cloud is removed by either going to court to have it legally adjudicated as invalid or by paying what is necessary to remove the claim.

Land is considered a different form of property for two reasons:

• it does not have a limited lifespan like most other types of property, and
• each piece of land (real property) is unique.

An owner has very strong rights in the property. Others, however, can also hold rights simultaneously. These rights could:

• give others access to use the property,
• prevent you from using the property as you would like, and
• even allow the property to be sold at a sheriff sale.

A diligent review of the records, also known as a title search, will discover any rights others may have. This is a crucial part of the process for issuing a title insurance policy.

A title search is a diligent historical review of all documents on the public record at the various filing offices in the state and county in which the property is located. This will discover:

• judgments
• mortgages
• delinquent taxes
• past due support payments
• unpaid federal & state income tax
• unpaid inheritance taxes
• other liens that are considered a “cloud” on the title

Your title insurance agent will make certain that any clouds discovered are removed as part of your purchase of that property and will guarantee that with a title insurance policy.

Many times, problems associated with a piece of real estate cannot be discovered by a title search. Such as:

• Liens could be recorded after you purchase the property that have a retroactive effect which could potentially cause serious legal consequences.
• Forgery or fraud discovered later could invalidate what appeared to be a legitimate document in the search.
• Incorrect indexing of document.
• Misfiling.
• Outdated records.
• Even human error.

These all can cause a future problem with the title to a property. Many other issues can arise after your acquisition. Without purchasing an Owner’s title insurance policy, you are only given information about the items that are known from the title search. There is no guarantee and you are not protected from any claims of others. Title insurance provides the guarantee.

Title insurance does not have a recurring premium as most types of insurance do. Once the premium is paid, an Owner’s policy protects you for as long as you own the property and in some case beyond. The premium is determined from the state regulated rate chart, click here to see this chart, and is based on the purchase price or fair market value of the property for an owner’s policy. This premium is regulated by the Pennsylvania Insurance Department. For a free quote of estimated closing cost for your specific transaction please call or email us.

Title insurance policies are not transferrable so the current owner’s policy would not cover you, the new owner, from missed clouds of the past. In addition, the current owner could have encumbered the title during their ownership time that could affect your ability to retain ownership or to sell it without you removing these clouds at your expense.

In accordance with the terms of your policy, it may provide you with a legal defense, pay court costs and related fees, and reimburse you for the actual loss up to the amount of the policy limit, typically the purchase price you paid for property.

In Pennsylvania, there are three tenancies or ways of holding title by two or more people:

1. Tenancy by the Entireties:
   • Only available to a married couple
   • In the event of death one spouse, property becomes the property of the surviving spouse
     • Can only be terminated by:
     • Death
     • Divorce
     • Conveyance by both spouses
   • Some protection against the judgment creditors of one spouse—a judgment against one spouse will generally not affect entireties property
2. Joint Tenants with Rights of Survivorship
   • In the event of the death of a joint tenant, his/her interest will be taken by the surviving joint tenants. Any inheritance tax must be paid.
   • Joint tenants must hold equal shares. If there are five joint tenants, each has a 1/5 interest in the property.
   • Conveyance of his/her interest by any joint tenant destroys the joint tenancy and creates a tenancy in common (see below).
   • No protection from judgment creditors
3. Tenancy in Common
   • In the event of death of a tenant in common, the interest passes to the heirs or beneficiaries in the Will of the tenant in common
   • Tenants in common can hold any percentage interest—John may have 80% interest and Mary a 20% interest
   • Tenants in common can freely convey their interest. Mary can sell her 20% interest in the property to someone without John.