What is Title Insurance?
Buying a home is usually the largest single investment one will ever make. When going through the process of buying a home, many types of insurances are purchased. These include insurances such as flood insurance and homeowners insurance. Those protect against loss from floods, fire, theft or wind damage. Title Insurance, however, protects you against the hidden threats in the title of your investment.
When buying a home, you are purchasing the Title to the property, this gives you the right to occupy the land and home. Title Insurance is very important, as it protects against title hazards. This insurance is purchased with a one time premium at the time of closing on the transaction.
What Kinds of Title Insurance Are There?
There are two basic kinds of Title Insurance to be issued at the time of closing, Lender and Owners.
When you purchase a home using a Financial Institution or Lender, they usually require that a Lender's Title Insurance be issued for the purchase. This is required, just like they may require other types of insurance, to add security for their investment in the property.
Owner's Title Insurance is a coverage that lasts as long as you hold interest in the property. The hazards this protects against will be further highlighted in the next subheading.
What Are You Getting?
When acquiring Title Insurance, the Title Agency works on eliminating risk before Title is even transferred into your name. This will then give the Owner a clear Title.
This process involves a search of the Public Records for the property. The examination will report all possible hazards on Title, to be worked on and cleared. Some issues that may be discovered include:
Deeds, Affidavits, or Trusts that reflect incorrect names or wording
Mortgages that are outstanding
Judgment Liens that may or may not be for the current owner
Property Taxes that are unpaid or delinquent
Incomplete Notary Acknowledgments
The above are the more-so obvious Title Hazards. There are, however, hidden ones that may be brought to the surface after closing- despite the careful and dedicated search. These additional hidden hazards could include the following:
Forged signatures on Deed- this could mean that Title was not technically transferred to the new Owner
Heirs that were unknown or previous owners claiming ownership
Documents that were completed with an expired Power of Attorney
Public Record mistakes
When purchasing Title Insurance, you are purchasing protection against the above hazards- a defense for your investment. The Insurer will pay to defend against the claims and will rectify the situation.
Your home is your most important investment and Title Insurance is extremely important in protecting your investment. Feel free to contact us with any questions you may have regarding the coverage.