Quick Answer
When someone challenges your ownership of real property, the first step is to notify your title insurer promptly and follow the claims procedures in your policy. The insurer may investigate the claim, provide legal defense, take curative action, settle the claim, or respond according to the policy's terms and conditions.
An owner's title insurance policy is not just a document. It is a promise to protect your ownership interest if a covered title problem arises. Understanding how to use that protection if someone challenges your ownership is important.
Step 1: Do Not Ignore It
If someone claims ownership of your property or asserts a lien or interest that could affect your title, do not ignore it. Even an unsubstantiated claim can affect your ability to sell or refinance. The sooner you act, the more options you have.
Step 2: Find Your Policy
Locate your owner's title insurance policy. The policy number, the insurer's name, and the claims contact information should be listed. If you cannot find your policy, contact the title company that handled your closing. They should have a copy.
Step 3: Notify the Insurer
Contact the title insurer according to the claims procedures in your policy. Most policies require prompt notice of any claim or potential claim. Provide the insurer with the relevant documents and information about the challenge. The insurer will open a claim file and begin the evaluation process.
What Might the Insurer Do?
Under a standard owner's title policy, the insurer may take several actions, depending on the nature of the challenge and the policy terms:
- Investigate: The insurer investigates the claim to determine whether it is covered under the policy.
- Provide legal defense: If the claim is covered, the insurer typically provides legal representation to defend your ownership.
- Take curative action: The insurer may take steps to remove the cloud or resolve the challenge without litigation.
- Settle the claim: In appropriate cases, the insurer may pay the claimant to resolve the dispute.
- Pay covered loss: If the claim is valid and covered, the insurer pays the loss up to the policy amount.
Learn more about what an owner's title insurance policy covers. Learn the difference between a title commitment and a title policy.
Does Title Insurance Guarantee You Will Never Be Sued?
No. Title insurance does not prevent someone from filing a claim or lawsuit against you. What it does is provide coverage for certain covered losses and legal defense costs if such a claim arises. Having title insurance means you have financial backing and legal support, not immunity from challenges.
FAQs
How long do I have to notify the insurer after a claim?
Most policies require prompt notice. Check your specific policy for the notice requirements. Failing to provide timely notice could affect coverage.
Can I choose my own attorney if someone challenges my title?
The insurer typically has the right to appoint counsel under the policy terms. If you want to use your own attorney, discuss this with the insurer. Some policies allow this under certain conditions, but the insurer's consent may be required.