You’ve found your dream home and invested a large amount of your personal savings into it, so it’s important for you to protect that interest. If you’re purchasing the home through a lender, they will require a lender’s title insurance policy. The reason for this is that the lender will want to protect their investment.
Lender and homeowners both want to protect their investments. As a homeowner, however, your investment might not be as solid as you thought. Common issues that homeowners can encounter:
- A lawsuit from an heir who was unaccounted for on a prior deed
- A neighbor who claims that they actually own that piece of land on which you want to build.
A title insurance policy protects against these claims, and insures that the title insurance company, not you, will assume fees for any legal fees arising under the policy.
WHAT DOES A TITLE INSURANCE POLICY COVER?
A title insurance policy protects against any defects in a title. These may include missing interests, gap in the chain of title, minor errors in documents, incorrect or inadequate legal descriptions, unpaid taxes, or prior liens.
A buyer’s title insurance policy is optional, but worth the investment. The cost of a policy is typically less than 1% of the purchase price of the home, and will protect against headaches and excessive litigation costs down the line.
Most of these issues are found upon review of title and cleared prior to closing. However, in the event that they are not resolved prior to closing, a title insurance policy insures that these issues will be covered by the title company. A title insurance policy is an offer of indemnity, through which the title insurance company agrees to resolve any defects in title.
Of course, it is important to ensure that the title policy covers against any risks. It is important to have an attorney review the title policy and any exceptions from coverage. Of course, there will always be “standard” exceptions, however, at times a title company may list so many exceptions to coverage that the title policy, in effect, offers little to no protection against title defects.
A buyer’s title insurance policy is optional, but worth the investment. The cost of a policy is typically less than 1% of the purchase price of the home, and will protect against headaches and excessive litigation costs down the line. While it may never be used, there are far too often situations where a minor issue winds up costing hundreds, or thousands of dollars to resolve.
I NEVER PURCHASED A TITLE INSURANCE POLICY, AND HAVE A TITLE ISSUE THAT NEEDS TO BE REMEDIED, NOW WHAT?
If there is no title policy, any title issues will need to be “cured” by a title curative attorney. Our office can assist with curing any title issues manually. Depending on the issue, the method for curing will vary from obtaining missing assignments or discharges, getting a release from heirs or prior owners, or correcting a legal description through a court action to reform the deed and/or mortgage. Especially if you’re trying to sell property, it is crucial that an attorney be contacted early in the process so that any title defects can be resolved prior to closing.