THE FAQS OF TITLE INSURANCE FOR HOMEOWNERS

When you buy real estate, a search is conducted to make sure the property's title is clear. That means the buyer will become the property's undisputed legal owner. Title insurance is designed to protect lenders and homebuyers from title issues uncovered after closing.

There are two types of title insurance: the owners and the lenders.

1. An owner’s policy is the best way to protect your property rights. Either the buyer or seller may pay for this policy. Ask your title professional how it’s handled in your area.
2. A lender’s policy is usually required by the lender and only protects the lender’s  financial interests. The buyer typically pays for this policy, but that varies depending on geography. Ask your title professional how it’s handled in your area. 

Owner’s title insurance protects your investment in your property from certain future legal claims regarding ownership of your property. For a one-time fee, you and your heirs* receive coverage for as long as you own your home. The owner’s policy also covers potential legal fees and court costs for settling claims covered by your policy.

Sometimes undiscoverable defects can come up after the title search. Under an owner’s title insurance policy, you are protected against certain undiscovered errors in the title.  

Title issues include unknown:

• Outstanding mortgages and judgments, or taxes;

• Pending legal action against the property that could affect you;

• An unknown heir of a previous owner is claiming ownership of the property.

Unforeseeable title claims include:

          1- Forgery: making a false document

For example, the seller misrepresents the identity of the person who sold the property.

          2- Fraud: deception to achieve unfair gain

For example, someone steals your identity and either sells your house without your knowledge or consent or takes out a second mortgage on the property and walks away with the money.

          3- Clerical error: inconsistent paperwork and historical records

For example, an unforeseeable discrepancy in the property or fence line can confuse ownership rights.

The one-time payment for owner’s title insurance is low relative to the value of your home. A typical title insurance policy costs around 0.5% of the home’s purchase price.

Your owner’s insurance policy lasts for as long as you or your heirs* own your property. Your life will change over time, but your peace of mind never will.

Closing is the final step in executing the homebuying transaction. It is the process that allows the transfer of ownership to occur. Upon completion of the closing process, you get the keys to your home!  

Yes, unless you are prepared to accept unlimited risk. If you get a mortgage, you'll be required to purchase title insurance to protect your lender. 

To be clear, if you get a mortgage, you'll have to buy title insurance to protect your lender. But if the buyer doesn't purchase title insurance any financial liability related to title issues could be their own responsibility.

Title insurance is issued after a careful examination of copies of the public records. But even the most thorough search cannot absolutely assure that no title hazards are present, despite the knowledge and experience of professional title examiners. In addition to matters shown by public records, other title problems may exist that cannot be disclosed in a search.

Here are just a few of the most common hidden risks that can cause a loss of title or create an encumbrance on title:

• False impersonation of the true owner of the property;

• Forged deed, releases or wills, Instruments executed under invalid or expired power of attorney;

• Undisclosed or missing heirs; Mistakes in recording legal documents;

• Misinterpretations of wills Deeds by persons of unsound mind;

• Deeds by minors;

• Deeds by persons supposedly single, but in fact married;

• Fraud;

• Liens for unpaid estate, inheritance, income or gift taxes

Title insurance will pay for defending against any lawsuit attacking your title as an insured, and will either clear up title problems or pay the insured's losses. For a one-time premium, an owner's title insurance policy remains in effect as long as you, or your heirs, retain an interest in the property.