WHAT IS TITLE INSURANCE?
Title insurance is an agreement to compensate against damage or loss from a defect in title as outlined in a policy of title insurance for a specific parcel of real property. Following a title search and examination of public records, and in exchange for a premium paid, title insurance companies will assume the risk that the title to a parcel of real property is as stated in the policy of title insurance. This comprehensive protection is designed to safeguard your ownership rights against potential legal disputes or claims that may arise from past events related to the property. By thoroughly examining historical records, title insurance companies aim to identify and resolve any issues before they become problems for the property owner. This proactive approach helps ensure a smooth transaction and provides long-term peace of mind for the insured party. Whether it's securing your financial investment or providing clarity about property boundaries and ownership, title insurance plays an essential role in the real estate process.
WHAT DOES TITLE INSURANCE DO?
Title insurance provides coverage against claims arising from various defects (as outlined in the policy) that may affect the title of a particular parcel of real property, effective from the date the policy is issued. Here are some common examples of risks that the owner’s policy typically covers, including title defects caused by:
- Inadequate execution of documents
- Errors in the recording or indexing of legal documents
- Instances of forgery and fraud
- Undisclosed or absent heirs
- Outstanding taxes and assessments
IS TITLE INSURANCE OPTIONAL?
Most lenders require the acquisition of a lender’s policy to protect their interest in the property; however, title insurance for the buyer is optional. An owner’s policy provides peace of mind, guaranteeing that your title company will assist you if a covered title issue or defect arises after you purchase your property.
WHAT DO TITLE COMPANIES DO?
Title companies offer essential services to clients in a real estate transactions, including buyers, sellers, real estate developers, builders, and mortgage lenders. They ensure that the transfer of title occurs smoothly and efficiently, while also safeguarding your interests as an insured party under the specific terms and conditions of the policy. Title insurance is different from many other types of insurances (e.g., casualty, auto, etc.). These other types of insurances assume risks by providing financial protection for losses arising from an unforeseen future event, such as a fire, theft, or accident. With title insurance, risks are examined and mitigated before the property changes hands.
WHAT IS AN OWNER’S POLICY?
An Owner’s Policy insures the owner of real property against loss resulting from matters covered under the policy of insurance for as long as they own the property. There are several versions of this policy. Consult with your real estate professional to determine which policy is best for you.
WHAT IS A LENDER’S POLICY?
A Lender’s Policy ensures the priority of the lender’s security interest over claims that others may have in the property.
HOW MUCH CAN I EXPECT TO PAY FOR TITLE INSURANCE?
Title insurance is generally calculated based on the value of your property. This one-time premium covers the cost of a title policy for as long as you and your heirs own the property.
WHO PAYS FOR TITLE INSURANCE, THE BUYER OR THE SELLER?
Who pays for title insurance can vary. In some areas, the buyer pays, while in other areas, the seller pays. In some places, the seller pays for the owner’s title policy, and the buyer pays for the lender’s policy. But in every case, the question of who pays closing costs is a matter of agreement between the buyer and seller. The agreement is based on the customary practice in your area.
WHO CHOOSES THE TITLE AGENT?
If you are investing in title insurance, you have the flexibility to shop around. This means you can select the title company that best suits your needs. You can either research the title company of your choice or opt for one that your real estate agent or lender recommends.
FOR FURTHER INFORMATION, ASK US ABOUT OUR TRUSTED TITLE COMPANIES AND REAL ESTATE ATTORNEYS
This message is for informational purposes only and does not constitute legal advice. For further guidance, please consult with a professional legal advisor.