I admit that I was not in agreement that the loss of a mile long easement to an 80 acre parcel in the Napa Valley was worth nothing so I turned to the Fidelity National Title Insurance Company website. The following was copied from www.fntic.com on November 21, 2009 (note: the lines that are bold and in red I emphasized before I sent this to my claims counsel in Omaha):
"WHAT IS TITLE INSURANCE?
A Word About Real Estate
Real estate has traditionally been a family's most valuable asset. It is a form
of wealth that is protected by many laws. These laws have been enacted to
protect one's ownership of real estate and the improvements located on the
land. The owner, the owner's family, and the owner's heirs have rights or
claims in and to the property that you are buying. Those who may have an
interest in or lien upon the property could be governmental bodies,
contractors, lenders, judgment creditors, the Internal Revenue Service, or
various other individuals or corporations. The real estate may be sold to you
without the knowledge of the party having a right or claim in and to the
property. In addition, you may purchase the real estate without having any
knowledge of these rights or claims. In either event, these rights or claims
remain attached to the title to the property that you are buying until they are
extinguished.
The Past Can Determine Your Future
Generally, a person thinks of insurance in terms of the payment of future loss
due to the occurrence of some future event. For instance, a party obtains
automobile insurance in order to pay for future loss occasioned by a future
"fender bender" or for the future theft of the car. Title insurance is a unique form of insurance.
It provides coverage for future claims or future losses due to title defects
which are created by some past event (i.e., event prior to the acquisition of
the property.) These risks are far less obvious than those protected against by
automobile insurance, but can be just as devastating. The following information
will answer some commonly asked questions about title insurance.
Will You Get Clear Title?
It is of utmost importance that you receive clear title to the property when
you purchase real estate. In order to do so, you must first be informed of any
existing rights or claims that may, in the future, threaten your title and
possession to the property. Title insurance provides you with this twofold
protection.
How Do You Find Out What Claims Exist?
In order to determine the status of title, Fidelity National Title conducts a
diligent search of the public records for those documents associated with the
property. Fidelity National Title then examines those recorded documents in
order to determine if there are any rights or claims that may have an impact
upon the title to the property. The
title search may reveal the existence of recorded defects, liens or
encumbrances upon the title such as unpaid taxes, unsatisfied mortgages,
judgments and tax liens against the current or past owners, easements,
restrictions and court actions. These recorded defects, liens and encumbrances
are reported to you prior to your purchase of the property. Once reported,
these matters can be accepted, resolved or extinguished prior to the closing of
the transaction. In addition, you are protected against any recorded defects,
liens or encumbrances upon the title that are unreported to you and which are
within the coverage of the particular policy issued in the transaction. This is
the first benefit you receive from title insurance.
What About Undiscovered Claims?
The title to the property that you have purchased could be seriously threatened
or lost completely by hazards which are considered "hidden risks."
"Hidden Risks" are those matters, rights or claims that are not shown
by the public records and, therefore, are not discoverable by a search and
examination of those public records. Matters such as forgery, incompetency or
incapacity of the parties, fraudulent impersonation, and unknown errors in the
records are examples of "hidden risks" which could provide a basis
for a claim after you have purchased the property. In order to protect you
against this possibility, Fidelity National Title provides insurance coverage
for such claims. This is the second benefit you receive from title insurance.
How Does a Title Insurance Policy Protect Against All These
Claims?
If a claim is made against your insured title, Fidelity National Title
Insurance Company protects you by: (1) Defending your title, in court if
necessary, at no cost to you, and (2) Bearing the cost of settling the case, if
it proves valid, in order to protect your title and maintain your possession of
your property.
Title Insurance Protects Your Asset
Title insurance gives you the assurance that possible clouds on title to the
property you are purchasing - which can be discovered from the public records -
have been called to your attention that such defects can be corrected before
you buy. Additionally, it is
insurance that if any undiscovered claims covered by your policy arises out of
the past to threaten your ownership of real estate, it will be disposed of, or
you will be reimbursed exactly as your title insurance policy provides.
Only One Premium
Unlike other forms of insurance, the original premium is your only cost as long
as you or your heirs own the property. There are no annual payments to keep your
Owner's Title Insurance Policy in force.
We Hope You Never Have A Title Claim
Americans have the future in mind when they buy a house, and they purchase
homeowner’s insurance to help protect that future. But with home ownership
comes the need to protect the property against the past, as well as the future.
Title insurance protects a policyholder against challenges to
rightful ownership of real property, challenges that arise from circumstances
of past ownerships. Each successive owner brings the possibility of title
challenges to the property.
When
you purchase real property, rely on Fidelity National Title to protect your
interests. You’ll be insured by a company backed by more than 150 years of
successful title operations.
Rely On Fidelity National Title To Protect Your Investment
Every owner, purchaser and beneficiary, whether by a deed or contract, should
have an insured title. The entire investment depends upon the quality of title.
If you are buying real estate mortgages, you are paying for a good title and
you should see that you have one. If either fire insurance or title insurance
is omitted, your security is not complete.
Our title policy protects you against unforeseen defects in title
that an abstract or the public records do not show and cannot show…nor any
attorney’s opinion includes.
Whether this is your first or fiftieth real estate investment, ask
your real estate agent or broker to specify Fidelity National Title during your
transaction."