Home Title Insurance: What To Know

a side view picture of a homeowner's policy of title insurance which is a document that protects homeowners from property loss or damage

One of the most essential reasons for a homeowner to get title insurance is to protect against fraudulent claims of ownership that may surface unexpectedly. Unfortunately, when buying a property there are people out there that will try to take advantage of you. You will want to be sure that there are no little surprises waiting for you after you move into your new house. A title search will ensure that nothing has been overlooked, and there are no discrepancies that may leave you open to fraudulent claims against your ownership after purchasing the property. 

It is imperative to obtain a clean title

It is what gives you ownership of real estate. Imagine that you bought a property, then one day you discover that the former owners have not paid property taxes in a decade.Title Insurance will protect both the real estate owner and the lender from defects in title to the property. In most states the prices are regulated so there is not much of a price difference from company to company.  All title insurance policies are generally the same and help protect against certain defects such as another party claiming ownership of property, fraud, forgery, liens, easements and other potential problems, as stated in the policy. This way all parties involved benefit from the title insurance.

Even new homes need title insurance

on top of a house deeds document is a set of keys and behind it is a house for sale sign with the word sold pasted on it

If you think purchasing a new home means you that you do not have to buy title insurance, that is not the case. There are many potential issues that affect buyers of new homes as well. The most common issue with newly built homes is connected to lawful ownership of the land on which the house is built upon. The property that you purchased might be brand new, but the land that it has been built upon is not. So it is possible for another party with a vested interest in the land to make a claim against the legality of your ownership. For example, if there was a piece of land that was left to multiple family members in a will, and it was sold without the knowledge or permission of one of the family members, this gives grounds for them to claim ownership of the land.

Owners insurance and lenders insurance

on top of the documents, policy of title insurance, deed of trust and homeowner policy declarations is a set of keys

If you choose to finance the purchase of your property, you will be obligated to buy lender’s title insurance that will protect the lender’s investment from any defects in the title of your homes such as third party claims or forged documents. The practices and regulations for title insurance will differ from state to state. In fact, in some states owner’s title insurance is completely optional.

When buying owner’s title insurance you can elect to go for standard or enhanced owner’s title insurance. The basic coverage will protect your ownership and determine if there are any restrictions on your use of the realty. Enhanced insurance will provide further coverage for potential problems like building permit violations, and zoning violations. Enhanced coverage will also protect you from disputes over building walls, mineral rights, and certain liens.