What Is Title Insurance? Is It Necessary?

Generally, a seller pays a premium to buy a title insurance policy at closing for the benefit of the buyer. There are usually two title insurance policies issued: one in favor of the buyer and one in favor of the lender. The buyer pays the premium on the lender’s policy. The two policies are issued simultaneously at closing. The lender’s policy typically doesn’t cost as much as the buyer’s policy. Title insurance is absolutely essential to the transaction otherwise the buyer has no way of ensuring that they are obtaining good title to the property. One of the main purposes for having title insurance is to have protection in the event that a claim comes out of the blue after closing. For example, if someone alleges that they and not the seller were the true owners of the property then the title company will represent the buyer’s interest in resolving the claim.

Are There Different Types Of Deeds, And Should I Care?

There are three basic deeds in Washington: a statutory warranty deed, a special warranty or bargain and sale deed, and a quit claim deed. The first two forms of deeds include warranties of title from the seller and state that the seller has the authority to convey the property to the buyer free and clear of all encumbrances other than those encumbrances set forth in the deed.

The difference between a statutory warranty deed and a special warranty deed is that the former deals include warranties from when the property was first patented by the federal government so that it could be sold. The special warranty deed is limited to matters arising only during the period of seller’s ownership. Generally, there aren’t many situations that will require a claim on the warranty because the first stop is always going to be to the title insurance company. If the title insurance company ends up having to pay a claim, then it may choose to go back against the seller for breaching the warranties that are in the deed.

A quit claim deed states that the seller is giving the buyer the same title as it has but it is not making any representations and warranties that they even have a title or that the title is free and clear. In Texas, quit claim land deeds are not used because of case law that states that they don’t serve as valid representation or transfer of title. In Washington State, quit claim deeds are used often in transactions between family members (e.g. in a divorce when the property is being conveyed from one spouse to the other).

Unique to probate is a form of deed called a personal representative’s deed, which is essentially the same as a special warranty deed. These types of deeds are used when someone who passes away owned real property that needs to be sold or transferred to his or her heirs. The executor or personal representative of the estate will carry out this transaction by using a personal representative’s deed.

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