5 Questions About Title Insurance
December 1, 2015
Purchasing a home is one of the biggest investments you’ll make in your lifetime, and it makes sense to protect your investment to the fullest extent. Homeowners insurance protects the physical structure of your home. Warranties protect your belongings. However, neither of these protects your property rights. The only way to ensure total protection of every aspect of your home is through title insurance.
What is Title Insurance?Title insurance is an insurance policy that protects the owner of a home or piece of property against any unforeseen title discrepancies.
How does it work?When a piece of property is financed, purchased, or sold, a record of that transaction is often filed in the public archives. At the same time, other events that could affect the ownership of a piece of property are also documented. These can include liens, levies, and encumbrances.
When you purchase title insurance, the title company will do an initial investigation and search every available record to find (and potentially remedy) any issues that could affect the purchaser’s ownership. From there, the underwriter will determine the insurability of the title and list exceptions from coverage and requirements to insure.
However, there are some issues that are difficult to identify. These include: filing errors, forgeries, or undisclosed heirs. Should these issues come to light, title insurance will cover the costs of any legal expenses needed to investigate or settle a claim.
What happens if I don’t get Title Insurance?Without title insurance, you could be subject to unwanted litigation, obligations, debts, or other costs. At worst, you could lose your property.
More often than not, an initial title examination will uncover any potential problems. However, due to what you stand to lose, proceeding without title insurance simply isn’t worth the risk.