What is Title Insurance and How Does It Work?
To put it simply, title insurance is a way to protect yourself from financial loss and related legal expenses in the event there is a defect in title to your property that is covered by the policy. Title insurance differs from other types of insurance in that it focuses on risk prevention, rather than risk assumption. With title insurance, title examiners review the history of your property and seek to eliminate title issues before the purchase occurs. Title insurance also differs in that it comes with no monthly payment. It’s just a one-time premium paid at closing.
Do I need Title Insurance?
Absolutely. Title insurance is a way to protect what is likely your largest investment—your home. An Owner’s Policy provides peace of mind that your title company will stand behind you if a covered title issue or defect arises after you have bought your home.
What Does Title Insurance Cover?
Any number of title issues may arise, even after the most meticulous search of public records. These hidden defects are dangerous because you might not learn about them for months, or even years, after purchase. Some common examples of risks covered by your Owner’s Policy include defects in title caused by:
- Improper execution of documents
- Mistakes in recording or indexing legal documents
- Forgeries and fraud
- Undisclosed or missing heirs
- Unpaid taxes and assessments
- Unpaid judgments and liens
- Unreleased mortgages
- Mental incompetence of grantors on the deed
- Impersonation of the true owners of the land by fraudulent persons
- Refusal of a potential purchaser to accept title based on the condition of the title
How Much Does Title Insurance Cost?
The one-time premium that you’ll pay for a title insurance policy varies by state, but generally is related to the value of your property. You can use our Rate Calculator to estimate how much your title insurance policy may cost.
What’s Owner’s Title Insurance?
An Owner’s Title Policy is designed to protect you from covered title defects that existed prior to the issue date of your policy. If a valid claim is filed, your Owner’s Policy, subject to its terms and conditions, will cover financial loss up to the face amount of your policy.
What’s Lender’s Title Insurance?
A Lender’s Policy provides no coverage to the homeowner. A Lender’s Policy insures that your lender has a valid, enforceable lien on your property. Most lenders require borrowers to purchase this type of insurance policy to protect their investment.
Who Pays For Title Insurance?
In our local market, it is common for the seller to pay for the title policy/insurance in a balanced and normal market. In cases where inventory is low and it is a strong seller's market - there are more cases where the buyer pays for the policy.
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