Going through the process of purchasing a home can be a stressful and tiring endeavor. From the paper work to the negotiations with the bank and realtor, you have to ensure you are financially protected when buying a home. To aid you in this, title insurance can be purchased to provide peace of mind.
What Is Title Insurance?
Title insurance is a one time expense paid at closing of your purchase and offers the insured protection against title errors which could have happened in the past. This includes past lien claims which may be logged against the recently purchased property. Depending on the price of the property, the cost of insurance will fluctuate.
Types of Title Insurance
There are two types of insurance that are available; one is for the real estate owner and the other for the lender. The lender (the mortgagee/lender) requires the title insurance from mortgagors to protect their security interest or secure the loan. Real estate owners require the insurance to cover for possible errors in the title or protect them from fraud and to assure that they have title without any claims against it.
How It Works
A thorough title search is conducted on the property in order to check any claims present. The search also verifies public records of the property and any pending liens. This type of search will also limit liability by detecting any probable title issues. Insurance will assist in shielding a property owner against these potential legal battles. It’s important to ensure that you chose an experienced and professional real estate attorney who issues title insurance or a title company to assist with obtaining the title insurance and conducting the necessary searches on the property title.
What Insurance Protects You From
These are some common title issues which title insurance could protect you from:
FraudFabricated or forged documents could be used to file ownership with public records. This could also involve a false identity presented by the previous homeowner.
Public Record ErrorsClerical or human errors can affect the deed of the property and can result in devastating errors on your ownership.
Unknown LiensOwning a property also results in the liability of paying bills. The previous owner may not have been very dedicated to ensuring all bills relating to the property are paid. Even if the debt was signed for by the previous owner, the liability of the debt can be attached to the property by banks or other financial institutions.
Undiscovered Will or Missing HeirsThe previous owner may be decease with the state selling the property as no will or heir could be found at the time. The will or heir could resurface, which might affect your ownership of the property.
Undiscovered StakeholdersThere might be more than one owner of the home just sold to you. This could also be as a result of former mortgage lien or non-financial claim.
Boundary DisputesAs part of the process of purchasing your home, surveys will need to be produced to confirm the property boundaries. Past surveys may have different boundaries attached and could allow neighbors to make claims on the parts of your property.
Unknown EasementsThe area surrounding your property should be all yours but may have an unknown easement. This will allow businesses or government to access it or use it for their purposes.
Why Do you Need It?
Given the amount of money and time spent in securing a property, title insurance is important in order to protect your investment. For a one time charge, you will be covered for past title claims or errors which may arise. Besides adding title insurance to the real estate checklist, consider enlisting the help of a real estate lawyer or attorney owned title company who could help you navigate through the buying process.