How Title Insurance Companies Protect Your Home
Buying a home can be complicated. There are a number of necessary parts to the transaction, from securing financing, to arranging for a home inspection, to determining closing dates. One of the most important parts of a real estate deal is choosing a title insurance company to protect you as you make one of the biggest investments of your life.
What is title insurance?
Title insurance companies provide home buyers with insurance that protects against any future challenges to the ownership of the home. The word “title” is a legal term that is used to represent the right of ownership to property. When you buy a home, the title is transferred to you.
Title insurance companies will make certain that the Seller actually owns and has good title to the property that is being purchased, as well as help to protect you against any liens or issues to the title that may have been preexisting before the title transfer. While a real estate lawyer might be able to find issues with a title before the transaction is final, there are no guarantees that undisclosed claims against the title, fraudulent signatures on the previous title, or any clerical errors in records affecting the title, won’t be discovered after the deal has closed. This is an example of one of the times when your title insurance policy will protect you.
A title search examined by a qualified, experienced real estate attorney or title examiner will help reveal title defects, unpaid taxes, and unsatisfied mortgages, all of which might affect the transfer of ownership to the new buyer.
Issues that might affect the title transfer
Other potential issues that could affect a title include unpaid liens, mortgages rights of way, which is the legal right to pass along a specific route through grounds or property that belongs to someone else, and encroachments, which implies that a title holder is violating the property rights of a neighbor.
The previous owner lying about marital status could also affect the deal, meaning that the previous owner might not have the legal right to sell the property and transfer the title. Mental incompetency of the previous owner could also impact the real estate transaction and the title transfer.
Protect yourself
That is why title insurance companies provide insurance that covers any potential issues that might present itself after the title transfer has occurred. The insurance, as per the policy that is purchased, will pay court costs, attorney’s fees and other fees related to any claim that is made against the property.
If any claim is found to be valid — for example, if the previous owner was found to not have the legal right to sell the property and transfer the ownership — title insurance companies will reimburse the buyer for the actual loss, as indicated by the policy.
Title insurance companies charge a one-time premium cost at the time of closing the real estate deal, and the buyer will have peace of mind that any issue that might be discovered after they have completed the purchase will be set correct by the insurer.
Don’t leave yourself unprotected when purchasing a home by not having title insurance. Instead, talk to your attorney or real estate professional about a title company and make sure you are covered for any unexpected title issues.