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Understanding Title Insurance

What is title insurance? Newspapers refer to it in the weekly real estate sections and you hear about it in conversations with real estate brokers. If you’ve purchased a home you may be familiar with the benefits of title insurance. However, if this is your first home, you may wonder, “Why do I need yet another insurance policy?” While a number of issues can be raised by that question, we will start with a general answer.

The purchase of a home is one of the most expensive and important purchases you will ever make. You and your mortgage lender will want to make sure the property is indeed yours and that no one else has any lien, claim or encumbrance on your property.

The Land Title Association, in the following pages, answers some questions frequently asked about an often misunderstood line of insurance - title insurance.

What is the difference between title insurance and casualty insurance?

Title insurers work to identify and eliminate risk before issuing a title insurance policy. Casualty insurers assume risks.

Casualty insurance companies realize that a certain number of losses will occur each year in a given category (auto, fire, etc.). The insurers collect premiums monthly or annually from the policy holders to establish reserve funds in order to pay for expected losses.

Title companies work in a very different manner. Title insurance will indemnify you against loss under the terms of your policy, but title companies work in advance of issuing your policy to identify and eliminate potential risks and therefore prevent losses caused by title defects that may have been created in the past.

Title insurance also differs from casualty insurance in that the greatest part of the title insurance premium dollar goes towards risk elimination. Title companies maintain title plants, which contain information regarding property transfers and liens reaching back many years. Maintaining these title plants, along with the searching and examining of title, is where most of your premium dollar goes.

Who needs title insurance?

Buyers and lenders in real estate transactions need title insurance. Both want to know that the property they are involved with is insured against certain title defects. Title companies provide this needed insurance coverage subject to the terms of the policy. The seller, buyer and lender all benefit from the insurance provided by title companies.

What does title insurance insure?

Title insurance offers protection against claims resulting from various defects (as set out in the policy) which may exist in the title to a specific parcel of real property, effective on the issue date of the policy. For example, a person might claim to have a deed or lease giving them ownership or the right to possess your property. Another person could claim to hold an easement giving them a right of access across your land. Yet another person may claim that they have a lien on your property securing the repayment of a debt. That property may be an empty lot or it may hold a 50-story office tower. Title companies work with all types of real property.

What types of policies are available?

Title companies routinely issue two types of policies: An “owner’s policy” which insures you, the Homebuyer, for as long as you and your heirs own the home; and a “lender’s” policy which insures the priority of the lender’s security interest over the claims that others may have in the property.

What protection am I obtaining with my title policy?

A title insurance policy contains provisions for the payment of the legal fees in defense of a claim against your property which is covered under your policy. It also contains provisions for indemnification against losses which result from a covered claim. A premium is paid at the close of a transaction. There are no continuing premiums due, as there are with other types of insurance.

What are my chances of ever using my title policy?

In essence, by acquiring your policy, you derive the important knowledge that recorded matters have been searched and examined so that title insurance covering your property can be issued. Because we are risk eliminators, the probability of exercising your right to make a claim is very low. However, claims against your property may not be valid, making the continuous protection of the policy all the more important. When a title company provides a legal defense against claims covered by your title insurance policy, the savings to you for that legal defense alone will greatly exceed the one-time premium.

What if I am buying property from someone I know?

You may not know the owner as well as you think you do. People undergo changes in their personal lives that may affect title to their property. People get divorced, change their wills, engage in transactions that limit the use of the property and have liens and judgments placed against them personally for various reasons.

There may also be matters affecting the property that are not obvious or known, even by the existing owner, which a title search and examination seeks to uncover as part of the process leading up to the issuance of the title insurance policy.

Just as you wouldn’t make an investment based on a phone call, you shouldn’t buy real property without assurances as to your title. Title insurance provides these assurances.

The process of risk identification and elimination performed by the title companies, prior to the issuance of a title policy, benefits all parties in the property transaction. It minimizes the chances that adverse claims might be raised, and by doing so reduces the number of claims that need to be defended or satisfied. This process keeps costs and expenses down for the title company and maintains the traditional low cost of title insurance.

Article by CLTA

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Testimonials

11/2018 
 
We bought our Kona home in November 2018 and are so grateful we worked with Lance and Kimi. We started working with them in the spring of 2018, when we visited Kona and Lance took us to see many properties and informed us about microclimates and different neighborhoods. Then we headed backed to Boston and Lance kept in touch with us about listings, the market, and the vog. One time he texted us a picture of a gorgeous clear day, and a few days later he texted a picture of a voggy day, saying he wanted us to see that too - that's the kind of people Lance and Kimi are, honest and upfront. Once we found a home their guidance and hard work were absolutely indispensable to us. Great negotiating skills, responsiveness to our many questions and concerns via text, email and Skype, and through the entire closing process holding our hands and digging up and/or checking all documents with our best interests in mind. There was so much to keep track of and so much we weren't even aware of that needed to be checked, we are beyond grateful that we worked with Lance and Kimi. They are experienced, knowledgeable, efficient, thorough, professional, and kind.
You can't go wrong with Lance and Kimi!

 
Denise & Joe  
2/19/2019
Lance, we love that your client has an agent who cares about them the way you do.
Love the idea of sharing the shifting market guide this way, and love even more your commitment to guiding and advising your clients through the buying/selling process. We are grateful to be your partner! 
Yours truly
Keeping Current Matters 
Charlotte P. H.

8/31/2018
What an outstanding experience we had with Lance Owens and Kimi Nagatoshi!! We gave Lance our thoughts about what we might be looking for in a new home on Hawaii Island and he showed us quite a number of places that fit that description. We hadn't thought we'd actually buy on that trip -- we were really only trying to see what we could afford -- but with what Lance showed us, we ended up putting an offer in after only 3 days of looking. And then Kimi went to work helping us through the entire process of the inspection, counteroffers, and, ultimately, the purchase. It's our dream home and we have both Lance and Kimi to thank! 
Karl and Mary 

Source: Realtor.com

Karl and Mary


8/30/2018
8/17/2018 
7/13/2017
5/22/2017
Lance and Kimi did a fantastic job selling our multiple lots in Kau. We continue to recommend Lance and Kimi to our friends!

Source: realtor.com

Kathy and John C.
5/18/2016 Aloha Lance! Thank you all for your “local kine” support of the Big Island Chocolate Festival this year. It was really very successful and your support helped us keep the ball rolling as we brought tickets in. I will let you know how much was raised for the schools, but wanted you to see this online news story that mentions your sponsorship. Hawaii 24/7 has quite a large readership. Thanks again! http://www.hawaii247.com/2016/05/15/big-island-chocolate-festival-names-top-confections/ Julie Ziemelis-Owner Ziemelis Communications Integrated Communications Expert-PR
2/29/2016 In 15+ years of Hawaii Mortgage Company dealing with thousands of realtors, it is very rare when you come upon agents who really care and love what they do and want to make the transaction as wonderful as possible for all parties involved. Lance and Kimi go above and beyond for their clients and the mortgage professionals (like us!) who they are working with. In a world full of mortgage regulations, Lance and Kimi make sure to keep everyone on track of the timelines to ensure closing on time, which benefits both the sellers and buyers. We are lucky to work with them and look forward to many more transactions together in the future! Maura K. Shannon Manager / Mortgage Loan Originator NMLS #339190 Hawaii Mortgage Company NMLS #232582 443 Portlock Road Honolulu, Hawaii 96825 Tel: 808-988-6622 Fax: 808-988-7722 Maura K. Shannon
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Kona Home Team
 Lance Owens RS-62947 | 808-936-8383 
Kimi Nagatoshi RS-76851 | 808-936-2575
LUVA LLC | RB-21030 | Office ID 2340 | Office 808-769-5111
75-240 Nani Kailua Dr. Suite 8, Kailua Kona, HI 96740