What is Title Insurance?

When you invest in a piece of real estate, you will be offered a title insurance policy to purchase. But before you dismiss any additions to your closing costs, you may want to reconsider. There could come a time in the future when you will either be grateful you have protection from title insurance - or wish you would have purchased a policy.

Understanding what title insurance is and how it can benefit you is the best way to make an educated decision when it comes time for your closing.

What is Title Insurance?

After you make an offer on your future home and sign the initial contract, a title search commences. This is a deep dive into the history of your property. It reviews the chain of title and any additional documents that may be associated with it. Does the seller have the right to sell the property? Are there any outstanding taxes? Are there any issues with the title? These are the things that the title examiner looks for before approving the title for closing.

A title insurance policy will be offered, covering things that happened before you became the owner of the property. This is much different than other types of insurance, such as car insurance or health insurance that protect against future events.

It doesn’t matter how thorough a title search is - things can still get missed. And once you have taken ownership, those prior title issues become your own. Without title insurance, these claims and title issues can threaten your property rights. However, with title insurance, you don’t have to worry about the time or money that it takes to fight them as it will be handled on your behalf.

Common Title Issues

So many different things can happen with a title, but a few of the most common title issues/defects include:

• Liens

• Judgments

• Unknown heirs

• Erroneous recording

• Missing will

• Forged documents

• Encroachments

• Easements

Types of Title Insurance

There are two general types of title insurance - an owner’s policy and a lender’s policy. While they both work to protect someone who has an interest in the property, they are quite different.

A lender’s title insurance policy protects the lender. They have taken a risk to give you a loan and this insurance gives them the confidence that they will be repaid should any title issues arise.

A lender’s policy is purchased with a one-time premium at closing and it lasts for as long as the loan is valid. Once it is satisfied, the insurance policy is no longer effective.

An owner’s title insurance policy protects the owner - and the owner’s heirs. It, too, is purchased with a one-time premium paid at closing and it lasts for as long as you or your heirs have an interest in the property.

It is worth noting that a lender’s policy will not cover the owner - and vice versa.

Learn More About Title Insurance

At The Closers, we want our clients to have a smooth, hassle-free experience throughout the entire home-buying experience. And sometimes that means sharing a little about what we know so you can make the best decisions for your future.

If you have questions, we have answers.

Contact us today at 757-595-4707 to learn more - or to get started.