Getting title insurance is one of the standard steps home buyers take before closing a home purchase. When you first purchase your home, you receive a deed, which shows the seller transferred their legal ownership or “title” of their home to you.
Title insurance can protect you and your assets if someone later sues and says they have a claim against the home before purchasing it. It’s crucial for a home buyer because it protects you and the lender from the possibility that your seller doesn’t, or previous sellers didn’t, have free and clear ownership of the house and property and, therefore, can’t rightfully transfer full ownership to you.
The owner’s title policy should not be confused with the lender’s protection. The typical protection against land title problems is designed to protect the lender’s security interest in the real estate purchase. The property owner is not covered unless the homebuyer requests and pays for an owner’s title insurance policy.
So, why is it important?
Protects Your Largest Investment
A home is probably the single most significant investment you will make. You insure everything else that’s valuable to you (your life, car, health, pets, etc.), so why not your most significant investment? For a one-time fee, owner’s title insurance protects your property rights as long as you own your home.
Reduces Your Risk
If you’re buying a home, many hidden issues may pop up only after purchasing your home. Getting an owner’s title insurance policy is the best way to protect yourself from unforeseen title discrepancies. Title claims can include: outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes; pending legal action against the property that could affect you; and an unknown heir of the previous owner who is claiming ownership of the property.
You Can’t Beat the Value
The owner’s title insurance is a one-time fee that’s very low relative to the value it provides. It typically costs around 0.5% of the home’s purchase price.
Covers Your Heirs
As long as you or your heirs own your home, owner’s title insurance protects your property rights.
Peace of Mind
If you’re buying a home, owner’s title insurance lets you rest assured, knowing that you’re protected from inheriting possible debts or legal problems once you’ve closed on your new home.
What If You Don’t Get Title Insurance?
The seller may knowingly try to sell you a home they don’t own at the most extreme. There have been instances of renters posing as sellers. However, typical title issues are less worthy of a crime show but more complicated. Another problem might be lurking in the more distant past from previous owners, or the seller might have inherited the house under the terms of a will that turns out to have been out-of-date and a more recent will leave the house to someone else.
The cost of a policy is a small price to pay for your peace of mind and the perpetual protection you need for your interests in the property. Contact us today if you have any questions or are looking to purchase your next home.
American Land Title Association