The Ins and Outs of Title Insurance

Title Insurance

When you purchase a home, you aren’t handed that home, you are given a title. A title is the evidence that the owner is in possession of the property that was purchased. It is the owner’s right to possess the property and use it how they please. There are many different ways a home can be titled, such as singularly and with other people, as tenants in common or as joint tenants. As with anything, one may want to purchase insurance for their title.

What is title insurance?

Title insurance protects real estate owners and lenders against any property damage they might experience because of any defects in the title to the property. It covers any events relating to the title that has already happened. However, it doesn’t cover anything that happens to the title after the date of insurance.

A title search is done by examining public records to find the history of property ownership. Problems such as prior deeds to others, wills, outstanding mortgages, or incorrect notary acknowledgments are found through this search and are usually cleared before the property is settled. If these problems are not cleared by the time the property is closed, it is up to the buyer’s discretion whether or not to go through with the purchase knowing the issues with the title. Title insurers find these issues and insure you against loss if they are not cleared correctly.

How is title insurance different from other insurance?

Title insurance insures the property against events that occurred to it in the past for a one-time cost at the time of closing. This premium, paid once, protects you indefinitely.

What does title insurance cover?

Title insurance protects claims from defects, such as improperly recorded documents, fraud, forgeries, and any other items that are specified in the insurance policy. For example, what if you are buying a property from an estate and the executor doesn’t have the heirs consent for the sale? Title insurance will protect you against that issue.

Who needs title insurance?

Most lenders require that their interest in the property is insured by title insurance. That insurance does not protect the owner and for a marginal difference in premium, the new owner will be protected as well.

Like homeowners insurance, which you pay every year and hope you never need, title insurance, which you pay only once, is insurance you hope you never need as well. However, not having title insurance, if there is a problem, can be very costly. For most people, the purchase of your home is the biggest financial investment of their lives. Why take a chance with that?

Need an attorney to handle your title? We recommend Hunter Title Agency, Inc.