What is title insurance?
It is a policy provided by the title company guaranteeing the accuracy of the title work done on your home at the time of purchase. As a buyer, you are required to purchase a lenders policy of title insurance as part of your standard closing costs, which only protects the mortgage company. An Owners policy of title insurance would protect you against any loss in the event of any legal issues relating to the title of your home. This is typically paid for and provided by the seller of the home. Please double check with your Realtor to insure this is the case with your transaction.
When ownership of a property is transferred, it is customary, in this area, for the seller to provide the buyer a policy of title insurance ensuring the ownership is being transferred free of known defects or encumbrances. Title insurance is a policy that guarantees to the holder that there are no claims against the ownership of the insured real estate as of the effective date of the policy excluding those exceptions listed in the policy. The policy ensures that if the status of the title to the subject real estate is other than has been represented, and the insured suffers a loss as a result of a defective title, the insurer will reimburse the insured for that loss and any related legal expenses up to the face value of the policy.
Title insurance is protection against loss arising from problems connected to the title to your property. Before you purchased your home, it may have gone through several ownership changes, and the land on which it stands went through many more. There may be a weak link at any point in that chain that could emerge to cause trouble. For example, someone along the way may have forged a signature in transferring title. Or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party for any claims and legal fees that arise out of such problems. For more information about title insurance, click HERE.
