Hawaii Title Insurance

The purchase of real estate in Hawaii as a primary residence, or second home can be one of the largest single investments you will make during your life. The loss of such an investment could be devastating to you and your family. So it is important to be certain that the owners selling the property have the ownership rights they are purporting to be conveying. That is not always easy to determine, which is why a title company is required.

An owner's right to property in Hawaii is sometimes obscure. There may be other parties, such as governmental agencies, mortgage lenders, or private contractors who also have rights to the property in the form of outstanding claims. How can you be sure that you will be the actual owner of the property you are deciding to purchase? By acquiring title insurance.

A Hawaii title insurance policy offers you information on the title status of the land before you complete the purchase and provides protection against claims that may affect the title once you are the legal owner.

Before your Hawaii real estate transaction closes escrow, public records are searched to find all related documents to the property being conveyed. These documents are then examined for their effect and a preliminary title report is issued. This report provides important information to all parties involved in the real estate transaction. It shows who the actual current owner is and any limitations on the owner's property rights, such as easements and outstanding mortgages. The buyer and lender should realize that these limitations must be removed completely, or addressed to the satisfaction of the title company, or they will continue to negatively affect the property after the close of escrow and will appear on subsequent title insurance policies issued.

If the status of title on the Hawaii property is clear before your purchase, why would you need title insurance? The answer is even after the most careful research, some title flaws such as forgery, fraud, or confusion due to similar names may go unnoticed. These problems may surface at a point in time in the future and affect the current owner on title.

A Hawaii title policy provides protection against future claims, which is issued after the transaction has been completed. Policy terms and conditions determine the extent of coverage provided to the insured. The policy restates the condition of title, reflecting all changes in ownership rights from the date of the preliminary title report to the date of the close of escrow. Separate policies are issued to protect the owner's and the lender’s interests. The owner's protection continues for as long as they own the insured interest, without any additional fee.

You can also obtain title insurance for almost any conceivable type of interest involved with real estate in Hawaii, including leaseholds, rights under contract of sale and easements.

When purchasing real property in Hawaii, title insurance is necessary:

1. A deed does not provide that the seller is the actual owner of the Hawaii property. A Deed can only convey whatever interest the grantor has and that interest may not be correct!
2. Hawaii title insurance provides you with information on the title status of the property, so any flaws or problems can be corrected before you complete the real estate purchase.
3. Title insurance covers for losses resulting from numerous defects in title, here are a few:
   • Forgery
   • Acts of persons of unsound mind
   • Acts of minors
   • Undisclosed heirs
   • Mistaken legal interpretation
   • Errors in research or clerical work
   • Invalid court proceedings
   • Invalid conveyance documentation
4. A Hawaii title insurance policy is like an agreement of prepaid legal service. The underwriter will provide legal defenses against challenges to your insured title. The extent of the defense will depend upon the policy coverage, as well as the estimated cost of a possible settlement.
5. Even though a recent owner’s title policy has been issued to the seller, the seller may still have unpaid taxes, liens from contractors, or personal judgments which could possibly and negatively affect the property. These would be disclosed and protected against through a new title search and owner’s policy.
6. Unlike other types of insurance in Hawaii, a title insurance policy requires only one premium to keep the owner's property fully protected for as long as they are the owner.
7. Even the most thorough search of the public records for a specific property cannot reveal all possible hidden defects.