To understand title policy insurance in America, let’s look at chain-of-title and how title companies search the public records. Title insurance companies aren’t really concerned with where dinosaurs once roamed, whether our ancestors trekked across the Bering Straight or where American Indian tribes settled. Title searches begin with when the United States government stole the land, I mean claimed it — from the U. S. patent — and move forward from that point.
Because humans are involved in recording deed transfers and plotting land parcels, a lot can go wrong. You want title insurance because it will protect you against defects and human error.Property Searches and Public RecordsDivision of Land
Early deeds involved large chunks of land known as Townships.
Townships contain 36 sections and are six miles by six miles.
Sections measure one mile by one mile and contain 640 acres.
Half of a section is 320 acres.
1/4 of a section is 160 acres.
1/4 section of 1/4 section is 40 acres.
An acre is 43,560 square feetTitle Search Basics
Title searches start with the most recent deed, searching the grantee’s name (the person now holding title) backwards in time, until the deed when the grantee acquired the property is located.
That grantor’s name is then searched backwards in time in the grantee’s book to find when the grantor acquired title as a grantee.
This process continues, and over time, the property description involves larger and larger parcels of land.
Eventually, the searcher finds the U. S. Patent.Other Factors Affecting Title
Deeds establish chain-of-title, but sometimes those chains are broken. In addition, title searchers also look for reconveyances (proof that the encumbrances are paid off), and they look for easements, rights-of-way, cc&rs, other elements affecting title to the property. Here are more records that are searched to piece title together:
Tax salesTitle Insurance Coverage
Depending on the title company, consumers can choose among a variety of options, but the top three choices are Owners, Lender’s and Extended Coverage.
Basic Owner’s Title Policy Coverage:
Clear title to the property
Incorrect signatures on documents
Encumbrances or judgments
Basic Lender’s Title Policy Coverage:
Mechanic’s liens and unrecorded liens
Unrecorded easements and access rights
Defects and other unrecorded documents
Extended Owner’s Coverage
Building permit violations from previous owners
Covenant violations from previous owners
Structure damage from mineral extractions
Variety of encroachments and forgeries after title insurance is issuedWho Pays For Title Policy Insurance?
This depends on your local custom.
It can differ from county to county, but it is also negotiable in the purchase offer.
Sometimes sellers and buyers split the fee for the owner’s policy.
Typically, the buyer pays for the lender’s coverage.How Long Are Title Policies Good For?
Forever, theoretically. If you are planning to resell the property within a couple years, ask your title company about “binder” coverage. Most companies will sell you a binder policy for 10% more. A binder is good for two years, often can be extended beyond that time, and the fee charged for the new buyer’s policy will be the difference between what you bought the property for and the price at which it sold. In other words, you will get a credit for the amount of coverage you purchased under your own Owner’s Title policy.How Often Are Title Policy Insurance Premiums Paid?
Once. The fee is due when you buy. You will never pay it again. Title policy insurance is the best insurance policy you can ever buy.Property transfers were first recorded alphabetically in separate Grantor and Grantee books.
The books are heavy to lift and dusty.
County records are often maintained at local courthouses or the Clerk of Registrars.
Today, most records are stored on the computer.
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Want to buy Billy Joel’s Sagaponack home? Last month the piano man dropped the price on his oceanfront house on Long Island’s East End again, this time from $19.9 million to $18.5 million. It started out at $22.5 million when he first listed the property in 2009.
And Joel is not alone. Across the U.S., prices last year continued to decline even in the richest neighborhoods. Sagaponack, a village with a population of only 582 (it swells during the summer), saw home values drop 14.5 percent from 2009 to 2010-yet it once again earned the No. 1 position on Businessweek.com’s ranking of the Most Expensive Small Towns in the U.S. It held on to the top spot because, despite the dip, median home values were $3,406,640, the highest in the nation, according to real estate website Zillow.com.
Working with the website, Businessweek.com identified the 50 most expensive small towns (populations less than 10,000) nationwide where median home values are the highest. We evaluated data on 4,624 cities and census-designated places from November 2010, the most recent available. Some expensive communities, such as Bel Air, Calif., were not included as they are neighborhoods rather than cities or census-designated places. Of the 50 most expensive places-many of which are second-home markets-nearly half are in Long Island’s Nassau and Suffolk counties and about one-quarter are in California. None of the towns in the ranking had a median home value of less than $1 million.
Biggest Price Declines
Values dropped in 33 of the 50 most expensive small towns. The biggest decline, 15.7 percent, came in Woodside, Calif., home to such tech billionaires as Oracle’s (ORCL) Larry Ellison and Apple’s (AAPL) Steve Jobs. Values in the second-most expensive town, Jupiter Island, Fla., were down 11.3 percent from a year ago, to just over $2.8 million, and in No. 4, Los Altos Hills, Calif., they were down 13.6 percent, to a bit more than $2.1 million.
In eight of these towns (five of which are among the top 10 most expensive), values were more than 10 percent below levels of a year ago. Nationwide, home values were down 5.1 percent, Zillow.com’s data indicate.
Only 17 places experienced increases in home values. The winner was Kings Point, N.Y., a wealthy suburb of New York City on Long Island’s Gold Coast, where prices rose 13.5 percent.
In the Hamptons, “prices have not yet rebounded,” says Michael Schultz, vice-president in Corcoran’s East Hampton office. With prices down, he expects activity to pick up in the first quarter this year.
Fewer High-End Sales
Home to wealthy Wall Streeters, corporate executives, and celebrities, the Hamptons saw both unit sales and prices down year-on-year after rising in early 2010. The third-quarter drop in the median sale price in the Hamptons-North Fork market was due to a shift away from high-end sales-only 11 homes sold at or above $5 million in the third quarter, down from 20 sales a year earlier, according to a report by Miller Samuel, a New York real estate appraisal services firm.
“Across the board, everyone brought their homes down 15 percent to 20 percent. Sellers are becoming more realistic” and buyers are more conservative, says Harald Grant, senior vice-president in Sotheby’s International Realty’s Southampton office.
After a strong first half in 2010, unit sales in Sagaponack and nearby Bridgehamptonwere down 18 percent year-on-year in third quarter, and the median sale price was down 53 percent, according to a report from real estate brokerage Corcoran. Despite this short-term softness, “Sagaponack is a strong market because it has cachet,” Grant says.
A Premium to Rub Elbows
What makes small towns such as Sagaponack attractive is their proximity not just to natural beauty and first-class golf courses but also to other wealthy people. That’s why the most expensive small towns often cluster around major financial centers. A survey of U.S. metropolitan statistical areas by consultancy Capgemini shows that New York City had 667,200 high-net-worth individuals, or people with investable assets of $1 million or more, in 2009-far more than any other metro in the country. Other wealthy areas include the Los Angeles metro area (235,800), Chicago (198,100), Washington, D.C. (152,400), and San Francisco (138,300).
Of the 50 most expensive small towns, 22 are in New York-namely, Long Island-and 13 are in California. Others were in Colorado, Florida,Massachusetts, Maryland, New Jersey, Washington.Making the ranking for the first time was even one town in Tennessee.Belle Meade (a very rich town in Tennessee).
Some well-known markets are less active. “Our really high-end market is almost frozen,” and buyers do not seem to want to buy above the $6 million level, says Paul Grover, a partner in Robert Paul Properties, a Cape Cod brokerage. With Wall Street turning around, he anticipates that demand will pick up, “but we’ll see it in New York first.”
That note of hope is one that many real estate brokers and home sellers across the U.S. share. In expensive small towns like Sagaponack, however, even the battered prices might strike many Americans as wealth beyond the dreams of avarice. It’s hard for someone who lives in a house valued in the mid-six figures-or less-to empathize with sellers asking prices in the seven- or even eight-figure range. But no owner likes to take a haircut when selling his home. Just ask Billy Joel.
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What you need to know when you are considering Home Insurance:
1. You’re a statistic.
To an insurer, you’re not a person; you’re a set of risks. An insurer bases its premium (or its decision to insure you at all) on your “risk factors,” including your occupation, who you are, what you own, and how you live.
2. Know your home’s value.
Before you choose a policy, it is essential to establish your home’s replacement cost. A local builder can provide the best estimate.
3. Insurers differ.
As with anything else you buy, what seems to be the same product can be priced differently by different companies. You can save money by comparison shopping.
4. Don’t just look at price.
A low price is no bargain if an insurer takes forever to service your claim. Research the insurer’s record for claims service, as well as its financial stability.
5. Go beyond the basics.
A basic homeowners policy may not promise to entirely replace your home.
6. Demand discounts. Insurers provide discounts to reward behavior that reduces risk.
However, Americans waste money every year because they forget to ask for them!
7. At claims time, your insurer isn’t necessarily your friend.
Your idea of fair compensation may not match that of your insurer. Your insurer’s job is to restore you financially. Your job is to prove your losses so you get what you need.