Title insurance: A no-no in Iowa is the norm in Arizona

Jeff Baxter Iowa Banking Law Iowa Real Estate & Land Use Des Moines Iowa Dickinson Law

Posted on 01/12/2016 at 11:03 AM by Jeffrey Baxter

Once you have decided to take the plunge and purchase a winter home in the Grand Canyon State, you will have a slew of information to consider. One of the first considerations will come after you enter into the purchase agreement. You will likely receive a commitment for title insurance from a title insurance company as part of the disclosures under your agreement. If you have owned property in Iowa, you may not be familiar with title insurance. Iowa is the only state that prohibits the sale of title insurance by its companies. Instead, you are likely more familiar with the update of your Abstract by an Abstractor and the issuance of a title opinion by your local attorney.

For the vast majority of transactions in Arizona, a policy of title insurance (or two if you are buying the property with financing) takes the place of the Abstract/title opinion with which you are familiar. Basically, a policy of title insurance protects you against potential problems affecting the title to your property. There are two types of title insurance Owner's Policies, and Loan Policies. A Loan Policy protects the lender for the amount of the loan, while the Owner's Policy protects the homeowner generally for the purchase price of the property. In both cases, the title process covers a search of public records to make certain the title to the subject property is clear, and covers against future loss against claims for items that are not listed as exceptions to the policy. Customarily, the Owner's Policy of title insurance is paid by the seller and the Lender's policy is paid for by the Buyer. Like the title opinion you have received in the past from your Iowa attorney, a commitment for title insurance will identify those outstanding issues which affect the title to your property.

If those items are issues, they need to be released prior to your closing on the property, or you will take subject to those items, and they will be exceptions to your policy, and you will have no protections against them. The most common items that show up on a title commitment are outstanding mortgages, liens, covenants and property restrictions, and easements. If you are considering purchasing a vacation or winter home in Arizona, and have questions about title insurance, or any other issue, please feel free to contact us to discuss those issues. Attorney Jeff Baxter is licensed to practice in Iowa and Arizona.

The material in this blog is not intended, nor should it be construed or relied upon, as legal advice. Please consult with an attorney if specific legal information is needed.


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