“Why do I need title insurance” is a question often asked by property buyers facing the myriad of costs associated with closing the sale on either residential or commercial property.
The answer is clear and very important: Investing in property is a major financial step and to do so without Title Insurance is risky and foolhardy. You are exposing yourself to possible title challenges (and loss), legal fees, mountains of paperwork, and hours spent in a courtroom only to find you don't actually own the property you believe you have purchased fair and square.
What does Title Insurance cover?
Title insurance policies are not issued until a thorough search of all public records regarding the property has been conducted by a title professional, but no one is perfect and trouble can arise from anywhere in the property’s history—problems of which you as the buyer are unaware. An unknown
heir is discovered, unpaid taxes pop up, an unsatisfied contractor slaps a lien on the property or perhaps someone’s name is incorrect or a past notary forgot to sign. Whatever the flaw, it could impact your ownership—unless you are protected by title insurance.
For a one-time payment, not only are you covered, legally and financially, from any flaws arising from the time before the house was yours, but you are also covered for as long as you own the home, be that 5 years or 50.
A Title Insurance Policy for your lender
Your mortgage lender will make use of a title insurance policy also, insisting on a Lender’s or Loan Title Insurance Policy before authorizing mortgage monies be released. The mortgage lender (who also has great financial interest in the property being sold) uses the policy to ensure
that their institution will also not be impacted by undisclosed title problems discovered after the title search. This policy covers the lender for the amount of the loan and declines accordingly as the loan is paid off. Just as they may require fire insurance or other coverage on the property up for sale, most lenders require a Lender’s Title Insurance Policy as security for their investment
in real estate.
With a title insurance policy, you are protected against claim and loss and have a stalwart ally in any fight—your title company—and you will enjoy the peace of mind that comes from knowing your investment is protected.
To learn more about Why Do I Need Title Insurance, visit www.alta.org.