Frequently Asked Questions About Title Insurance

What is title insurance?

Title insurance offers financial protection against hazards through negotiation by the title insurer with third parties, payment for defending against an attack on title as insured, and payment of claims.

An important part of title insurance is its emphasis on risk elimination before insuring. This means the insured has the best possible chance of avoiding a title claim and loss. Title insuring begins with a search of public land records for matters affecting the title to the real estate. The examination of evidence from a search/title commitment is to provide a report of what the title insurer is willing to insure on the property. Frequently, instruments that don’t clearly pass title are found in the chain, or history, of ownership assembled from the records in a search. These need to be corrected before a clear title can be conveyed. Here are some examples of instruments that can present concerns:

Deeds, wills, and trusts that contain improper vestings and incorrect names
Outstanding mortgages, judgments, and tax liens
Easements
Incorrect notary acknowledgments

Through the search and the examination, title problems like these are disclosed so they can be cleared up whenever possible. But even the most careful preventive work cannot locate hidden hazards of title. Despite all the expertise and dedication that goes into a search and examination, hidden hazards can emerge after completion of a real estate purchase, causing an unpleasant and costly surprise. Some examples include:

A forged deed that transfers no title to real estate
Previously undisclosed heirs with claims against the property
Instruments executed under expired or fabricated power of attorney
Mistakes in the public records

Frequently asked questions about title insurance

There are two types of title insurance policies:

An owner’s title insurance policy is purchased by the seller and is issued in the amount of the real estate purchase price.

How long does the owner's policy last?
The policy remains effective as long as the insured, or his/her heirs, have an interest in the property.

Do you have to renew the policy?
No, you pay for title insurance only once. Keep your policy, even if you transfer your title or sell the property.

What if I lose a copy of my title policy or need another copy?
The Insurance Department does NOT receive or keep copies of title policies issued in Utah. You will need to contact the title agency you closed your real estate transaction with. If the agency no longer exists, you will need to reach out to the title insurance company to file a claim or request a copy of your policy.

What happens if I transfer my title to my trust, business, or children?
Depending on the type of policy you have, it may not provide coverage when you transfer your title into your business or to someone else that is not considered an insured. To determine what type of coverage you have, read your policy, check with your title agent, or speak with an attorney.

A lender's title insurance policy is issued to the mortgage lender. It protects the lender’s interest in the property until the borrower pays off the mortgage. Most lenders require a lender’s policy as a condition of the mortgage. Depending on the loss/damage of the claim, the policy may repay the balance of your mortgage. A loan policy covers up to the amount of the principal on your loan.

How long does the lender’s policy last?
The lender’s policy remains in effect until the mortgage loan is repaid. Most lenders will require you to buy a new lender’s policy if you refinance your home. When the new loan pays off the existing loan, the old lender’s policy expires.

Why does my owner’s policy cost more than the lender’s policy?
The owner’s policy can cost more than the lender's policy because it is based on the full purchase price of the property, while the lender’s policy is based on the loan amount, which is typically lower than the total purchase price.

Why do I need to purchase another policy when I refinance?
When you refinance your home, the new loan will pay off the existing loan and the old lender’s policy will expire.

Yes, your real estate agent, builder, or lender may recommend a title agency, but you can choose any agency you want. Utah requires all title agents and escrow officers to be licensed by the Insurance Department.

It is illegal to sell title insurance without a license in Utah. To verify if a title agency is licensed, use our Licensee Search tool.

Section 9 of the Real Estate Settlement Procedures Act (RESPA) prohibits sellers from conditioning the home sale on the use of a specific title insurance company and/or title agency. You may contact the federal Consumer Financial Protection Bureau, who regulates RESPA, or the Utah Division of Real Estate, who regulates real estate agents, if you have a complaint.

You can shop around for cheaper escrow fees or closing costs. These may differ between agents.

Other escrow settlement service charges must be billed at a reasonable hourly rate.

Most title agencies charge for things like tax certificates and escrow fees, recording fees, and delivery expenses. Review any charges carefully, you may ask to see your closing papers in advance. You may also have an attorney attend the closing with you.

The title commitment lists potential issues, exclusions, or exceptions. It alerts the buyer to issues that exist and could cause problems in the future. It does not guarantee that there are no current issues or that none will arise in the future. You should discuss how to clear potential issues with the title agent. You may want to review potential issues with a lawyer.

Read the title commitment carefully as these items can become exclusions or exceptions under Schedule B of your policy. Exceptions and exclusions are items not covered by the policy.

Title policy forms in Utah are promulgated, or standardized. This means most of the policy language is the same regardless of which company that sells the policy. Title agents are required to use the standardized forms. The parts of the policy that may be changed are the property description in Schedule A, the exceptions in Schedule B, and the exclusions. You should review those sections carefully. You can request corrections if you notice an error. The agent may be able to remove an exception, if a title problem is cleared up or if you buy additional coverage.

A title defect is anything that can cause a title to be considered invalid or defective in some way. Some examples are:

Invalid documents due to forgery, fraud, undue influence, duress, incompetency, incapacity, or impersonation
Failure of any person or entity to have authorized a transfer or conveyance
A document affecting title that is not properly executed, signed, witnessed, notarized, or delivered
Undisclosed or unrecorded easements not otherwise apparent on your land
No right of access to and from the land
A document executed under a falsified, expired, or otherwise invalid power of attorney
A document not properly filed, recorded, or indexed in the public records
Ownership claims by undisclosed or missing heirs
Defect arising from an improper prior foreclosure
Undisclosed restrictive covenants affecting your property

Lien issues can also cause title defects. Some examples of lien issues are:

Any statutory or constitutional contractor’s, mechanic’s, or materialman’s lien for labor or materials that began on or before the policy date; talk to an attorney about your rights
Lien for labor or materials furnished by a contractor without your consent
A previous owner failed to pay:
- a mortgage or deed of trust
- a judgment, tax, or special assessment
- a charge by a homeowners or condominium association
Other liens or claims that may exist against your title that are not listed in the policy

Notify your title agency immediately if someone files a lien or claims an interest in your property. Failure to do so could jeopardize your claim. Contact the title insurance company (underwriter) listed on the policy and follow their claim-filing procedures.

A title policy generally won’t cover mistakes or defects, financial issues, or rights issues. Items that aren't covered include:

Defects that are created after the policy is issued
Defects that you create, or of which you had knowledge
Problems that arise because of your failure to pay your mortgage, or to obey applicable laws or restrictive covenants that were disclosed to you
Certain taxes and assessments
Losses resulting from rights claimed by someone else occupying the land; the title company may need to inspect the property and there may be a charge for the inspection
Claims from other people who may have certain rights if your property is near a body of water or has a river or stream flowing through it
Condemned land, unless a condemnation notice appeared in the public record on the policy date, or the condemnation occurred before the policy date
Violations of building and zoning ordinances and other laws and regulations related to land use, land improvements, land division, and environmental protection
Disclosed restrictive covenants limiting how you may use the property; request copies of restrictions and have your attorney explain them