5 Questions About Title Insurance

Jul 07 20140 Comment

Title Insurance GraphicIf you are purchasing a property, you have specific plans for that investment – such as living in the house, developing the lot or even re-selling the property as some point down the road. Here’s a quick look at how title insurance helps ensure that your plans are protected:

What is title insurance?
Title insurance is a contract that insures your ownership in a piece of real property and that your ownership is free of any other debts or obligations that were not created or agreed to by you. It essentially protects you and any others with financial interest in the property against loss should encumbrance, defective title or liens be brought against the title.

Does the seller or buyer pay for title insurance?
Typically (though it is up for negotiation during your initial offer period), the seller pays for the buyer’s “Owner’s Standard Title Insurance Policy” and the buyer in turn pays for the “Title Insurance Policy”, or “Loan Policy”, which protects your lender’s interest in the property. Having an owner’s policy is important because the financial institution’s policy will only cover the amount of the loan, which is typically less than the actual value of the property.

How much does title insurance cost?
The cost of title insurance will vary depending on the value of your property but the coverage you put in place is a one-time fee paid at closing and your policy will cover you for as long as you (or your heirs) have an interest in the property in question.

Can I lose my house if a title claim is brought against my property?
This depends on the claim. In an extreme case, it is possible that you forfeit your home and property and still have to fulfil your monetary obligations as far as the mortgage but with title insurance, your protection and course of action are far more concrete.

What happens if a claim is filed against my property?
If a claim is brought against your property and your policy covers it, your legal costs associated with the investigation, litigation or settlement of the claim are covered and you’ll also be protected against monetary loss or damages resulting from title defects.

If you have any questions regarding the role of title insurance in the home buying process, let us know. We work with a fantastic group of title and escrow experts and can refer you to the appropriate party in the event your question falls outside our area of expertise.

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