Strategic Planning: Stewart Title Company and Fidelity National Title Insurance Company
Title Examination and Insurance
The purpose of a title examination is to ascertain the ownership of the property being
transferred, what debts are owed on it, and what the title policy coverage will be (Business,
2006). This involves searching for and examining documents such as deeds, mortgages, wills,
divorce decrees, court judgments, liens, and tax records (Stewart, 2006).
At the closing, or settlement, the seller executes a deed to the new owner. The buyer
signs new mortgage documents. Closing funds are then disbursed to the seller, the prior
mortgage company, real estate brokers, the title company, and others (Wickell, 2006). The
documents are then recorded in the public records. A title policy is generally issued both to the
lender and to the new owner (Business, 2006).
Lenders in the United States generally require title insurance as a condition of making a
loan on real estate, including securitized lending (Wickell, 2006). This is to assure lenders of the
priority of their lien position. The purchasers of the property want the assurance given in their
policy against claims that may arise against their ownership (Stewart, 2006).
Title insurance seeks to eliminate most risks through the examination and settlement
process. Losses on policies may occur because of a title defect not discovered during the
examination and settlement process (Stewart, 2006). Other reasons for losses include forgeries,
misrepresentations, unrecorded construction liens, the failure to pay off existing liens,
mishandling of settlement funds, issuance by agents of unauthorized coverages, and other legal
issues (Wickell, 2006).