A title insurance policy protects you and the lender against losses that may occur if there are any legal defects in the title to your home. Without title insurance, the lender would have to rely solely on a title search and attorney review for protection. With title insurance, you have the benefit of a complete examination of the title by a company that specializes in land title matters. This specialized examination is more thorough than an attorney’s review and affords greater protection. Tile insurance can be obtained from a title company, such as MacGregor Abstract.
Title insurance also protects you from losses that might occur if any outstanding liens or judgments are not noted on your policy. It also protects you from claims arising from a defect in your title after closing.*
The cost of title insurance is not included in the loan amount. The lender will charge you for it when you apply for your loan and your closing agent will collect it at closing. Title insurance is usually required by your lender and is often required by your state.*
A standard homeowner’s policy does not protect against losses involving land titles. You need separate coverage to protect yourself against these losses — this is what is commonly referred to as “title insurance.” A standard homeowner’s policy will protect you against losses resulting from fire, windstorm or other events covered by the policy; it will not protect you against losses involving land titles.
A title search is a report of the chain of ownership on a particular property. This can include all liens, mortgages, easements and other interests in the property. The purpose of a title search is to identify any issues that may affect your ownership interest in the real property. A title insurance policy protects against loss due to defects in the title or chain of title, or from the failure of others to pay debts secured by an interest in the real property covered under the policy.
Title insurance policies are issued by title insurance companies, which are authorized by state law to issue such policies. Title insurance policies are similar to other types of insurance policies in that you must pay a premium for coverage and that there is an exclusion for some types of circumstances. If you have questions about whether your situation requires you to purchase title insurance, consult with your attorney or real estate professional before proceeding with the closing.
One of the most difficult parts of a real estate transaction is determining whether title to the property is clear and free of any liens or encumbrances. It may be obvious to some, but others may find that there are still more questions than answers. What is title insurance? How does it differ from a survey? What happens if I don’t have it?
Title insurance is a policy protecting the buyer against loss for any reason involved in transferring ownership of real estate. Since most people do not have the expertise or knowledge about legal issues involved in a real estate transaction, obtaining title insurance is advised. The policy protects you from any problems that may arise with respect to the title being clear and free from liens or encumbrances. A survey determines only the boundaries of the lot and does not guarantee that there are no unpaid taxes, unpaid water bills, unpaid mortgages or other claims against the property.
Title insurance can be obtained through the closing agent or directly from an insurer. It is easy to obtain and inexpensive because it is sold at closing by real estate attorneys or real estate agents. Many people think they can skip this step because they have obtained a survey on their own and believe that it will protect them completely.