TITLE INSURANCE
Why title insurance?
Title insurance is generally not as well understood as other forms of home insurance, however; it is just as important! When you purchase a home, you are purchasing the title to the property & the right to occupy it. Title insurance protects you against title hazards such as claims and rights by the previous owners. Title Insurance is a one-time premium paid at closing which protects the homeowner against loss from defects that already exist in the chain of title.
There are two different types of title insurance:
• Lender’s Coverage (required by the lender if the home is financed)
• Owner’s coverage
Lenders require mortgagee title insurance as security for their investment in real estate, in the same way they require homeowners to have fire/hazard insurance. A lender’s policy protects the lender in the event of a loss due to title defects which are not known at the time of the sale. A lender’s policy protects the lender, and does not protect the homeowner.
Owner’s title insurance lasts as long as you, the policyholder – or your heirs – have an interest in the insured property. An owner’s title policy protects the homeowner in the event of a loss caused by a defect in title. Examples of defects in title are errors of public records, unsatisfied notes, previously forged documents, unknown heirs claiming the rights to your property. These are just a few of examples that jeopardize your rights to the title of your home.
Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims – all for a one-time charge at closing.
Your home is your most important investment. Before you go to closing, ask about your title insurance protection, and be sure to protect your home with an owner’s title insurance policy.
Why should I get title insurance?
Purchasing title insurance is one of the standard items a home buyer should take before closing on their home purchase. Title insurance is critical for a home buyer because it protects you and the lender from the possibility that your seller doesn’t — or previous sellers didn’t — have free and clear ownership of the house and property and, therefore, can’t rightfully transfer full ownership to you. While the chance of calling on the insurance for coverage is relatively low, the value on what you stand to lose if you go without coverage is high — you could, in fact, lose the house itself.
What is title insurance?
An insurance policy–protecting against loss should the condition of title to land be other than as insured.
Why do I need title insurance?
When you buy a home, or any property for that matter, you expect to enjoy certain benefits from ownership. For example, you expect to be able to occupy and use the property as you wish, to be free from debts or obligations not created or agreed to by you, and to be able to freely sell or pledge your property as security for a loan. Title insurance is designed to cover these rights you bargain for.
What if I have a problem? Do I have to lose my property to make a claim?
Not at all. At the mere hint of a claim adverse to your title, you should contact your title insurer or the agent who issued your policy. Title insurance includes coverage for legal expenses which may be necessary to investigate, litigate or settle an adverse claim.
What does this cost?
The cost varies, depending mainly on the value of your property. The important thing to remember is that you only pay once, then the coverage continues in effect for so long as you have an interest in covered property. If you should die, the coverage automatically continues for the benefit of your heirs. If you sell your property, giving warranties of title to your buyer, your coverage continues. Likewise, if a buyer gives you a mortgage to finance a purchase of covered property from you, your coverage continues to protect your security interest in the property.
If my lender gets title insurance for its mortgage, why do I need a separate policy for myself?
The lender’s policy covers only the amount of its loan, which is usually not the full property value. In the event of an adverse claim, the lender would ordinarily not be concerned unless its loan became non-performing and the claim threatened the lender’s ability to foreclose and recover its principal and interest. And, in the event of a claim there is no provision for payment of legal expenses for an uninsured party. When a loan policy is being issued, the small additional expense of an owner’s policy is a bargain.
