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970.596.3228
“Title” is a term broadly used to describe matters affecting your legal rights to own, possess, use, control or sell your property. Many types of matters can adversely affect your property’s title. It is very important as a buyer for you to identify and understand all title issues affecting your prospective property before you buy and also to understand what title insurance is, if you obtain it as part of your purchase. There are at least two important parts of title evaluation; (1) obtaining and understanding all title information affecting your property, and (2) getting as much protection as you can from problems which might develop from title matters, including those which you identify. If you are selling, it is also good to understand why your title is important to the buyer.
During the contract period before closing, the title insurance company selected in the contract by the parties will perform a type of “title search,” and provide you with a “title commitment” (the commitment to issue a title policy upon closing).
Title “insurance” is actually an agreement of “indemnity” between the title company and the named insured owner/buyer/lender, by which the title company agrees to protect you against certain challenges to your title by third parties, which agreement is subject to certain exceptions, conditions, exclusions and stipulations which are set forth in the title commitment and policy. Understand what those are before you close since they can limit or preclude your getting coverage for potential claims. Should you suffer an adverse claim or loss due to a title matter which was not disclosed to you, or which otherwise is within the scope of coverage in your title policy, your insurer may, if you request it, under certain circumstances, be required to try to fix the problem, defend you against it, or if the company cannot fix it, compensate you for allowed losses which fall within the policy limits, if any.
Following are some questions you should ask and things you should do about title issues before buying a property:
Right after you receive the recorded title documents in your title commitment, ask your lawyer or broker to help you determine if there are any title issues that might affect your property. Keep track of the “deadlines” in your contract during which you can review, and if you choose to, object to any title matters you find objectionable. If you do not object before any deadline, you may be left with no ability to correct any of the title matters identified before you close.
If you do discover adverse title matters, ask if there are any title endorsements which the title company might issue to you (and how much they cost) to help insure against some or all of risks that might develop from those title matters.
Find out who will underwrite the insurance. Often, the company whose name shows on the commitment is a title agent, not the underwriter which would respond to any claims you later might have. There may be a significant difference in the cost and scope of coverage of title insurance amongst the various underwriters authorized to do business in Colorado. Some companies may have more assets to cover claims than others.