Title Insurance in Arizona: Protecting Property Interests

When purchasing real estate in Arizona (and in many other states), it is common for the seller to buy the buyer title insurance. And if the buyer is using a loan to purchase the property, the buyer often buys the lender a title insurance policy. This doesn't mean every real estate transaction includes title insurance, yet it is a practice most real estate professionals encourage, for the protection of the buyers and sellers.

Title insurance is like any insurance policy, it gives monetary protection if a specific problem arises. We purchase homeowner's insurance, to cover the loss of our property if the house burns down. And a homeowner has title insurance to cover the loss or expenses should it be discovered there was forgery or fraud connected to the transfer of ownership, which was undetected during the sales transaction.

A few years back my mother purchased land in California. After the contractor surveyed the land, it was discovered the neighbor's fence was over on mom's property, about four feet. Since the neighbor had just purchased the house, she immediately contacted her title company. Although the neighbor lost a portion of what she believed was her yard, she was compensated for her loss.

The title company industry wasn't developed until the late 1800s. Up until that time buyers received an attorney's title opinion, an abstractor's certificate or a grantor's warranty as verification of ownership. Yet, if the attorney, abstractor or grantor was unscrupulous or careless, a buyer may discover they did not actually own the property they had paid for.

Today, states regulate title companies, and require financial guarantees and other requirements. Like all insurance companies, title insurance coverage may vary from company to company.

The title insurance policy will protect the interest of the buyer for as long as he or she owns the property. If the buyer sells the property, or transfers it to a family member, the title policy will no longer be valid. If the owner dies, and the property passes to heirs, it may still be covered. Before making any ownership changes on your property, it is advisable to check with your title company and attorney, to determine if your title policy will continue to protect the interests of the property and its owners.

In Arizona, it is normally the buyer who chooses the title company, even though it is the seller who will be buying the buyer's policy.