Title Insurance
Title insurance protects against certain problems with the legal ownership of a property.
Before closing, a title search is performed to look for problems such as liens, unpaid taxes, ownership disputes, or errors in the public record. But even a thorough title search cannot uncover every possible issue.
Some title problems may not become known until after the purchase is complete.
Examples can include:
- An old mortgage or lien that was never properly released
- Unpaid property taxes or assessments
- Errors in public records
- An unknown heir who later claims an ownership interest
- A missing or improper signature on a previous deed
- Fraud or forgery in a prior transfer of the property
- Easements or other rights affecting the property
- Boundary or ownership disputes
There are two primary types of title insurance:
Lender’s Title Insurance
When you obtain a mortgage, the lender will generally require a lender’s title insurance policy.
This policy protects the lender’s financial interest in the property if a covered title problem is discovered.
It is important to understand that lender’s title insurance protects the lender. It does not protect the homeowner’s ownership interest.
Owner’s Title Insurance
Owner’s title insurance protects the homeowner against covered title problems that existed before the property was purchased but were discovered later.
If a covered title claim arises, the title insurance company may defend your ownership, work to resolve the title problem, or reimburse you for a covered financial loss, subject to the terms of the policy.
Unlike homeowners insurance, which generally has an annual premium, owner’s title insurance is typically purchased with a one-time premium at closing.
Why Consider Owner’s Title Insurance?
Your home may be one of the largest purchases you ever make.
A title search is designed to identify problems before you buy, but some ownership issues can remain hidden. Owner’s title insurance provides an additional layer of protection if a covered title problem surfaces after closing.
The lender protects its interest with lender’s title insurance. Owner’s title insurance gives the homeowner the opportunity to protect theirs.