1. Why is title insurance important?
Title insurance protects buyers and lenders by ensuring the property being purchased has a clear, marketable title. Unlike other forms of title evidence, title insurance provides broader protection — including fraud, errors, or missed claims — and gives peace of mind that your investment is secure.
2. What does a title insurance policy do?
A title insurance policy is a contract with a title company that, for a one-time premium, protects you against financial loss if someone challenges your ownership rights. If a valid claim arises, the title company provides legal defense and covers losses up to the policy amount.
3. What is a title insurance commitment?
Before issuing a policy, a title company provides a commitment. This document outlines what will be insured, lists current ownership, and notes any requirements or exceptions. It is valid for 90 days and ensures all parties know what must be resolved before closing.
4. What does a title commitment disclose?
It describes the property, names the proposed insured, identifies the current owner, and explains both coverage and exceptions. It also lists requirements that must be satisfied before a final policy can be issued.
5. What is a title search?
A title search is a review of public records affecting the property. While it can reveal liens, mortgages, or easements, it does not guarantee accuracy — which is why a title insurance policy is needed for protection.
6. Who pays for title insurance?
In Arkansas, it is customary for the seller to pay for the buyer’s owner’s policy, while the buyer pays for any lender’s policy. However, this can vary and is always negotiable as part of the contract.
7. Why do mortgage lenders require title insurance?
A lender’s policy ensures that their loan is secured by a clear, enforceable lien on the property. It protects the lender’s interest in case of defects or competing claims, and it is often required under federal lending regulations.
8. Do buyers and lenders need separate policies?
Yes. A lender’s policy only protects the lender, while an owner’s policy protects the buyer. For full protection, both are issued at closing. Fortunately, they can often be issued together at a reduced “simultaneous issue” rate.
9. Does title insurance guarantee the title is perfect?
No. Policies typically include standard exceptions and exclusions for things like zoning laws or claims not recorded in public records. However, they still provide powerful protection against many common risks.
10. What does an owner’s policy usually cover?
- Undisclosed liens or defects in title
- Errors or omissions in public records
- Fraud, forgery, or incapacity of prior owners
- Lack of legal access to the property
A lender’s policy may add protections for loan enforceability and lien priority.
11. What is excluded from coverage?
Title insurance will not cover:
- Government regulations (zoning, environmental laws)
- Eminent domain claims
- Rights of parties in possession not shown in records
- Unrecorded easements, mineral rights, or boundary disputes
- Defects you knew about but did not disclose
12. Should I review exceptions in my title commitment?
Yes. Exceptions can affect your right to use or resell the property. Reviewing them before closing ensures you understand issues like easements, restrictions, or outstanding liens.
13. How do exceptions impact buyers and lenders?
Unresolved exceptions can limit property use, reduce value, or weaken a lender’s security interest. Buyers should work with their title company to resolve or understand these issues before closing.
14. Are there special features I should know about?
Yes. Many policies include:
- Arbitration provisions (disputes may be settled outside court).
- Coinsurance requirements (if significant improvements increase property value, you may need to increase coverage).
15. Do I need to renew title insurance?
No. Unlike other forms of insurance, title insurance is purchased once at closing and lasts as long as you own the property. An owner’s policy even continues to cover you after you sell if a later claim arises from your period of ownership.
👉 Still have questions?
Our team at Citizens Title & Closing is happy to walk you through the details of title insurance and make sure you’re fully protected. Contact us today.