Understanding the Reasons for Filing a Claim, How to File a Claim, and the Aftermath
Owning a home is a significant milestone in life, but unexpected challenges can sometimes arise during the homeownership journey. This is where title insurance steps in to offer essential protections and peace of mind. When title defects or issues affecting your property’s ownership arise, filing a title insurance claim may become necessary. Understanding the reasons for filing a title insurance claim, the process of filing, and the subsequent steps can ensure a seamless and positive experience. We’ll walk you through the title insurance claim process, step by step.
Reasons for Filing Title Insurance Claims?
Undisclosed Liens or Encumbrances:
After a property purchase transaction, it sometimes becomes known that there were previously unknown or undisclosed liens or encumbrances that were on the property’s title at the time of its purchase. These hidden claims can lead to potential financial liabilities for the homeowner and diminish the security for a mortgage loan on the property. Title insurance protects against such scenarios, covering the cost to clear the liens and safeguarding owner and mortgage lender rights.
Errors in Public Records:
Mistakes happen, even in official public records. If errors in public records affect the property’s title, they can lead to complicated legal issues, challenges to your ownership, and the priority of your mortgage loans. Title insurance provides a safety net by covering the expenses to rectify the covered errors and clear the title of any encumbrance caused by the error.
Fraud or Forgery:
Property fraud and forgery are unfortunate realities in today’s real estate world. If someone attempted to fraudulently transfer or encumber your property without your knowledge or that of a prior owner, title insurance may provide protection. Filing a claim will trigger an evaluation of the policy coverage to defend against the impacts of the fraudulent acts.
Zoning and Building Permit Violations:
Zoning and building permit violations can lead to costly penalties and even require modifications or demolitions. Most title insurance policies provide some coverage for these issues provided certain conditions are met.
Easements and Right of Way Disputes:
Easements and right of way disputes with neighboring properties can be complex, time-consuming, and expensive to resolve. Title insurance provides coverage for many of these issues to protect property rights and allow owners and mortgage lenders to navigate these disputes with confidence.
How to File Title Insurance Claims?
Gather Documentation:
The first step in filing a title insurance claim is to gather all relevant documentation related to the issue. This may include the title insurance policy, the property purchase contract, the deed, and any other relevant records or communication related to the issue at hand.
Contact Your Title Insurance Company:
Next, get in touch with the Claims Department for your title insurance company following the directions provided in the policy. They will guide you through the claim filing process, provide any necessary forms, and advise as to any information or documentation that may be needed to proceed with the claim.
Submit the Claim:
Complete any claim forms provided by your title insurer and submit them along with an explanation of the issue(s) and any related actions that have occurred and any supporting documentation. Be as thorough and detailed as possible to ensure a smooth and efficient claims process.
What Happens After Filing Title Insurance Claims?
Claim Investigation:
Once your title insurance company receives the claim and supporting documents, they will initiate an investigation. They may work with a title search company to review the property’s history, will seek out any appropriate additional information, and will assess the validity of the claim.
Legal Defense:
If the claim is found to be covered by the title insurance policy, your title insurer will provide legal defense and/or cover the costs associated with resolving the issue. This may involve hiring attorneys or experts to handle the matter on your behalf.
Resolution:
The title insurance company will work towards resolving the title issue and protecting the rights of the owners or the insured mortgage lender This may include clearing liens, recording corrective or confirmatory documents in the Land Records, or addressing other issues affecting the property’s title.
Reimbursement or Coverage:
Depending on the nature of the claim and the policy coverage, your title insurance company may reimburse you for expenses incurred in resolving the issue or provide direct coverage for the costs.
Closing the Claim:
Once a covered title issue is resolved and the claim is successfully closed, you will receive a notification from your title insurer. This marks the completion of the claims process and will allow the owner(s) and insured mortgage lender to move forward with confidence in the property’s clear title.
In conclusion…
Filing a title insurance claim can be a straightforward and essential process to protect an investment in real estate. Whether it’s dealing with undisclosed liens, errors in public records, fraud, or other title-related issues, title insurance is there to shield property owners and mortgage lenders from unexpected financial burdens. By understanding the reasons for filing a claim, the process of filing, and what happens afterward, insured owners and lenders can navigate the claims process with confidence. Remember, title insurance is an ally in securing a smooth and positive homeownership or mortgage lending experience, providing insured parties with the assurance that their investment is well-protected and property rights are upheld.
If you need to file a claim, please contact our legal team.