Wednesday, May 23, 2018

Do I Really Need Title Insurance?

house-in-microscopeYou have wisely enlisted the services of a licensed Realtor as your Buyers Agent and she has helped you find a house that you’re ready to own. You have already been pre-approved for a mortgage and you expect the house to appraise for the purchase price. You safely assume that your loan will be approved. So what exactly are you purchasing and how do you know that the seller can rightfully sell it to you? How do you protect your interests?

You Obtain Title Insurance

When purchasing a home or other real estate, you actually don’t receive the land itself.  What you acquire is title to the property with the potential limits asserted by the rights and claims of other prior owners.  Paying your money and receiving a deed does not assure you of “good” title.  Title insurance plays a major role in making certain that your home ownership is free and clear of any rights or claims of prior owners.  Title insurance protects you and your mortgage lender from potential risks associated with defects in title.

How Much Does Title Insurance Cost?

Unlike other kinds of insurance that protect from future occurrences, title insurance protects you from past occurrences.  Therefore, rather than annual premiums, you will pay a one-time premium, directly related to the value of your home, at the time of settlement that will insure you against loss arising from defects or hazards that may exist in the title up to the time of your purchase.

Hidden Title Hazards Can Cause Unpleasant Surprises

In spite of all the expertise and dedication that go into a search and examination, hidden hazards can emerge after completion of a real estate purchase, causing an unpleasant and costly surprise.  Some examples include the following:

  • A forged deed that transfers no title to real estate
  • Mistakes in the public records
  • Previously undisclosed heirs with claims against the property
  • Instruments executed under expired or fabricated powers of attorney

Owners could lose their homes or equity or delay a home sale without owner’s coverage.  Your owner’s title policy will protect you!  If a claim arises, your title insurance company will defend against its consequences, paying the claim and legal fees to defend your ownership.

The purpose of the title search is to disclose land title problems, take appropriate action to clear the records and enable the transaction to be consummated.  There may be hidden defects that not even the most diligent search can disclose.  Nevertheless, you are protected against these with an owner’s title insurance policy.