Frequently
Asked Questions About Title Insurance:
Why Do You Need Title Insurance?
Buying a new home
is one of life's most gratifying experiences. As you approach the big day of closing, however, all the details can be
a little overwhelming. You might easily overlook the single most important step in the entire process: the purchase
of Title Insurance on the wonderful new home of yours.
What is a Title?
A title is the evidence, of right,
that a person has to the ownership and possession of land. It is possible that someone other than the owner has a legal right
to the property. If that right can be established, this person can claim the property outright or make demands on the owner
as to its use.
Do I need Title Insurance?
Without question! Title insurance is a means of protecting yourself from financial
loss in the event that problems develop regarding the rights to ownership of your property. There may be hidden title defects
that even the most careful title search will not reveal. In addition to protection from financial loss, title insurance pays
the cost of defending against any covered claim.
What can make a Title Defective?
Any number of problems
that remain undisclosed after even the most meticulous search of public records can make a title defective. These hidden "defects"
are dangerous indeed because you may not learn of them for many months or years. Yet they could force you to spend substantial
sums on a legal defense, and still result in the loss of your property.
But the lender already requires Title Insurance, won't that protect
me?
Not necessarily. There are two types of Title Insurance. Your lender will require that you purchase
a Lender's Policy. This policy only insures that the financial institution has a valid, enforceable lien on the property.
For every loan that a lender makes, the Lender requires a loan policy and they typically require the borrower to pay
for it. An Owner's Policy on the other hand is designed to protect you from title defects that existed prior to
the issue date of your policy. Title troubles, such as improper estate proceedings or pending legal action, could put your
equity at serious risk. If a valid claim is filed, in addition to financial loss up to the face amount of the policy, your
owner's title policy covers the full cost of any legal defense of your title.
How much does Title Insurance cost?
The
one-time premium is directly related to the value of your home. Typically, it is less expensive than your annual auto
insurance. It is a one-time only expense, paid when you purchase your home. Yet it continues to provide complete coverage
for as long as you or your heirs own the property.
If you have any additional questions, please don't hesitate to contact one of our offices!
