Buying a property is a major milestone for many people. It’s exciting to imagine your future in your new home or count the money you hope to make from your investment property. However, with this excitement comes a responsibility to protect your investment, and that’s where title insurance comes in.
Title insurance is vital to protecting your property, but when is the best time to purchase it?
As legal experts in title insurance, we’ve put together all you need to know about the best time to purchase title insurance. Whether you’re a first-time homebuyer or an experienced real estate investor, it’s important to remember the following factors.
What Is Title Insurance?
Title insurance protects real estate owners and lenders against negative financial implications due to faults in a property’s title or ownership rights.
In Florida, title insurance works by thoroughly searching public records to identify any potential issues or defects in the property’s title history. The title company then issues an insurance policy that covers the policyholder against any claims or disputes that may arise due to these issues.
The policy remains valid for as long as the policyholder owns the property, and it typically covers the property’s full purchase price.
There are two main types of title insurance: lender’s title insurance and owner’s title insurance.
- Mortgage lenders typically require lender’s title insurance to protect their investment in the property.
- Owner’s title insurance is optional but highly recommended for property buyers as it protects the buyer’s investment and ownership rights.
Title insurance is a must-have for several reasons. For example, it protects property owners and lenders from potential financial losses due to property title issues. It can include anything from simple errors in public records to complex legal disputes over ownership rights.
These issues can arise anytime, even years after the property was purchased, resulting in costly legal fees and investment loss. Title insurance provides peace of mind to property owners and lenders by covering the cost of any legal defense or compensation to resolve title issues.
The Best Time To Purchase Title Insurance
Ultimately, the best time to buy title insurance can be broken down into two distinct phases: before closing and after closing.
Purchase Title Insurance Before Closing
Purchasing title insurance before closing the deal allows the buyer to have the insurance in place from the moment they take ownership of the property.
One of the main benefits of purchasing title insurance before closing is that it provides coverage for any title issues that may arise before the property officially changes hands. These potential issues include fraud, forgery, or liens on the property that may not have been discovered during the title search process.
Having title insurance in place before closing can give buyers peace of mind and protection against unforeseen issues that may arise in the future. Additionally, purchasing title insurance before closing can often be more cost-effective than waiting until after closing.
Purchase Title Insurance After Closing
Another option for purchasing title insurance is after closing on the property. Although it’s generally recommended to purchase title insurance before closing, it is possible to buy it after closing as well.
One benefit of purchasing title insurance after closing is that it allows the buyer to conduct a more comprehensive title search before purchasing the insurance policy. The search can help to identify any title issues that may have been missed during the initial search.
Additionally, purchasing title insurance after closing can benefit buyers who may have been unaware of the importance of title insurance during the initial closing process. While purchasing title insurance after closing may be more expensive, it’s still a viable option for buyers who want to protect their investment in the property.
Factors To Consider When Purchasing Title Insurance
Regardless of when you choose to purchase title insurance, there are several important factors to consider before selecting the right policy.
- Location of the property: The area impacts the potential risks associated with the property’s title, such as tax liens or zoning restrictions.
- Type of property: Different types of properties may carry different types of title risks.
- Previous ownership and transfer history: Title issues can arise from mistakes or fraudulent activities that occurred in the past.
- Legal claims on the property: Claims can arise from various sources, including heirs not properly notified of a previous owner’s death, disputes between co-owners, and outstanding liens or judgments against the property.
- Cost of title insurance: The cost will depend on various factors, including the location and value of the property and the type of insurance policy chosen.
Purchase Title Insurance In Florida
Purchasing title insurance is essential for protecting your investment in real estate. Whether you choose to purchase before or after closing, it’s important to consider the location and type of property, previous ownership and transfer history, legal claims on the property, and the cost of the policy.
Consulting with a professional law firm, such as Handin Law, provides valuable guidance in selecting the right policy for your needs. Don’t hesitate to reach out for assistance and ensure that you have the proper protection to safeguard your investment in your property. Give us a call at 1-877-815-4560.