St. Croix: Why You Need Title Insurance

"A title search is the process of determining from the public record just what the rights of a property are and who owns them. It is a means of determining that the person who is selling the property really has the right to sell it, and that the buyer is getting all the rights to the property that he/she is paying for. In most real estate transactions, a title insurance policy is purchased to assure the buyer that he/ she has purchased a valid title. in those transactions where title insurance is involved, the title company must determine insurability of the title as a part of the search process. If a title insurance policy is issued, the title company will, at its own expense, defend the title and pay losses within the coverage of the policy if they occur.

"There are several things involved in a title search for St. Croix property. First, the chain of title is determined - that is a history of ownership of the property, telling who bought it and sold it, and when.

"Next is a tax search, which is done to determine the present status of general real estate taxes against the property. This search will reveal if taxes are current or whether any taxes are past due and unpaid from previous years. In addition, the tax search will indicate the existence of any special assessments against the land, and if so, whether or not these assessments are current or past due. Title insurance protects the buyer against loss from unpaid and past due taxes and assessments.

"One of the most important parts of the title search is to determine if there are any unsatisfied judgments against the seller or previous owners which were in existence while they owned the title. It is very important to be sure that a title is not subject to judgments against the seller or previous owners. Title insurance provides this protection. If a judgement is discovered that constitutes a defect in the title, it is pointed out, and the seller must then eliminate it before the title of the new buyer can be insured free and clear of that judgment.

"When all these searches have been completed , the title company issues a commitment to insure, stating the conditions under which it will insure the title. The buyer, seller and lender can proceed with the closing of the transaction after clearing up any defects in the title which may have been uncovered.

"The lender is as concerned as the buyer about the quality of the title, because the property will secure the loan. The lender requires assurance that it has a valid first mortgage lien on the property. The lender's title insurance, however, DOES NOT PROTECT THE NEW BUYER OF THE PROPERTY. Although the land is the same, the interest of the buyer and the interest of the lender are very different, as are the provisions of the policies of title insurance. The buyer should obtain his/her own policy, often issued simultaneously with the lender's policy."