Can Title Insurance Be Transferred?

Title insurance is an essential part of any real estate transaction, offering buyers and lenders protection against potential issues or disputes over property ownership. But what happens when you sell or transfer ownership of a property? A common question that arises during this stage is whether title insurance can be transferred to the new owner. In this article, we’ll explore the nuances of title insurance transfer, how it works, and what you need to consider.

Understanding Title Insurance and Its Role

Title insurance serves a critical purpose in real estate transactions. It protects property owners and lenders from financial losses related to title defects, such as unknown liens, errors in public records, or disputes over property boundaries. Unlike other types of insurance, title insurance involves a one-time premium payment and remains effective for as long as you or your lender holds an interest in the property.

However, title insurance is a one-party policy. The original owner or lender is the only entity protected under the terms of that policy. This distinction is particularly important when discussing whether title insurance can be transferred to a new property owner.

Can Title Insurance Be Transferred?

The short answer is no, title insurance generally cannot be transferred to a new owner.

Title insurance policies are tied to the original insured party, meaning the insurance coverage ends once the property changes hands. If a property buyer wants protection against potential title issues, they will need to purchase a new title insurance policy for their own benefit. The reasoning behind this is that every real estate transaction is unique, and a new buyer deserves an individual policy to ensure they’re covered for any risks associated with the property.

However, there are exceptions for lender title insurance. When a loan is sold to another financial institution, the lender’s title insurance policy can often be assigned or transferred to the new lender. This ensures continued coverage for the financial institution’s investment in the property.

Why Purchasing a New Title Insurance Policy Is Essential

You might be wondering why a new title insurance policy is required for buyers in every transaction. Essentially, each buyer introduces new risks and needs unique assurances. Here’s why purchasing a new policy benefits property buyers:

• Protection Against Existing Threats: The new policy protects against hidden defects, such as forged documents or undisclosed heirs, that might arise after the property is purchased.

• Customized Coverage: The new title insurance policy is tailored to the buyer’s specific transaction, reflecting the purchase price, property ownership history, and current recorded liens or encumbrances.

• Financial Security: A new policy ensures that any costs related to claims, such as legal proceedings, are borne by the title insurance company and not the buyer.

By obtaining a fresh title insurance policy, buyers can confidently proceed with their transaction and secure their investment against unexpected complications. 

The Closers of Virginia, Inc. provides expert title, real estate, and FSBO services to residential and commercial clients throughout Virginia.