The largest investment for most is the purchase of their home. The importance of protecting this investment can not be overstressed. Having a title insurance policy assures that the rights and interests to the property are as expected and that the owner of this property is protected against future claims against the property. This is a very effective and inexpensive way of protecting your ownership rights.
When a property is sold, a ‘title company’ often is tasked with searching the property’s title history also known as the “title search”. This search is used to examine all the public records on a home to determine the owners right to sell and discover any potential challenges to the transfer. Here you will find information on taxes, mortgages owed, judgements against the property, land uses and encumbrances that may affect the future use.
There are some hidden hazards that even the most diligent title search may never reveal. For, instance, the previous owner could have incorrectly stated their marital status, resulting in a possible claim by the legal spouse. There may also be cases of fraud, forgery, errors or even seller confusion that come to light after you purchase a home. These can jeopardize your right to ownership.
You need to be protected from the unknown or items that were not discovered in public record. Most issues with title can be fixed with a few phone calls, sign-offs on legal documents or a multitude of simple processes. But not all! Even years after owning your home issues can arise where you need more stringent legal “teeth”.
Title companies can defend your rights in court at their expense or remedy monetary loss or damage that has occurred.
Who needs these policies?
Typically, in a real estate transaction there will be two policies typically issued.
- Owner’s Policy – This policy is often purchased by the seller of the home to protect the new buyer for the full amount paid for the property.
- Lender’s Policy – Buyers will be required to cover the lender’s risk with a separate but matching policy.
Most types of insurances charge ongoing fees or yearly premiums. This is not the case with title insurance policies. You will have an original premium which you will pay at closing and this will last the life of the policy.