Owner’s title insurance is designed to protect you from covered title defects that existed prior to the date of your policy and which may not have been discovered during a title search. It also covers the cost of any legal defense of your title for a covered matter.
A home is probably the single largest investment you will make in your life. You insure everything else that’s valuable to you—your life, car, health, pets, etc., so why not your largest investment? For a
one-time fee, owner’s title insurance protects your property rights for as long as you or your heirs own your home.
f you’re buying a home, there are many hidden issues that may pop up only after you purchase your home. Getting an owner’s title insurance policy is the best way to protect yourself from unforeseen legal and financial title discrepancies. Don’t think it will happen to you? Think again.
Unexpected title claims include:
Owner’s title insurance is a one-time fee that’s very low relative to the value it provides. It typically costs around 0.5% of the home’s purchase price.
As long as you or your heirs own your home, owner’s title insurance protects your property rights.
Homeowners insurance and warranties protect only the structure and belongings of your home. Getting owner’s title insurance ensures your family’s property rights stay protected.
If you’re buying a home, owner’s title insurance lets you rest assured, knowing that you’re protected from inheriting any existing debts or legal problems, once you’ve closed on your new home.
A. Title Insurance offers protection against claims resulting from various defects (as set out in the policy) which may exist in the title to a specific parcel of real property effective on the issue date of the policy. For example, a person might claim to have a deed or lease giving them ownership or the right to possess your property. Another person could claim to hold an easement giving them a right of access across your land. Yet another person may claim that they have a lien on your property securing the repayment of a debt. That property may be an empty lot or it may hold a 50-story office tower. Title companies work with all types of real property.
A. This point is often misunderstood. Although the title company or escrow office usually serves as a meeting ground for closing the sale, only a small percentage of total closing fees are actually for title insurance protection. Your title insurance premium may actually amount to less than one percent of the purchase price of your home and less than ten percent of your total closing costs. The title policy is good for as long as you and your heirs own the property with the payment of only one premium.
A. Surprisingly, “who pays” is not uniform. In some areas the buyer will pay while in others the seller will pay. In some places, the seller will pay for the owner’s title policy and the buyer will pay 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. Usually this agreement is based on the customary practice in your area.
A. Both you and your lender will want the security offered by title insurance. As the owner, you will want assurances that the home is yours and that you are protected against certain title defects. Your lender will likely want title insurance in order to protect its loan security interest, and may even be required to have
a lender’s policy in place in order to sell the loan to secondary market investors.
A. In essence, by acquiring your policy, you derive the important knowledge that recorded matters have been searched and examined so that title insurance covering your property can be issued.
Because title insurance companies are risk eliminators, the probability of exercising your right to make a claim is very low. However, claims against your property may not be valid, making the continuous protection of the policy all the more important.
When a title company provides a legal defense against claims covered by your title insurance policy the savings to you for that legal defense alone will greatly exceed the one-time premium.
A. You may not know the owner as well as you think you do. People undergo changes in their personal lives that may affect title to their property. People get divorced, change their wills and engage in transactions that limit the use of the property and have liens and judgments placed against them personally for various reasons.
There may also be matters affecting the property that are not obvious or known, even by the existing owner, which a title search and examination seeks to uncover as part of the process leading up to the issuance of the title policy.
Just as you wouldn’t make an investment based on a phone call, you shouldn’t buy real property without assurances as to your title. Title insurance provides these assurances.
The process of risk identification and elimination performed by the title companies, prior to the issuance of a title policy, benefits all parties in the property transaction.
Title Insurance minimizes the chances that adverse claims might be raised, and by doing so reduces the number of claims that need to be defended or satisfied. This process keeps costs and expenses down for the title company and maintains the traditional low cost of title insurance.