Title Insurance
WHAT IS IT?
Title insurance is a form of insurance that protects property owners and lenders against financial losses resulting from defects or issues with the title of a property. It provides coverage for potential problems that may arise in the chain of ownership, such as undisclosed liens, errors in public records, forgery, fraud, or mistakes in previous deeds or wills.
When a property is purchased, a title search is conducted to examine the history of ownership and ensure that the title is clear and free of any encumbrances or claims. However, even with a thorough title search, certain issues may go undetected. Title insurance offers protection in these situations by indemnifying the property owner or lender against any losses incurred as a result of such hidden defects.
Title insurance policies are typically issued based on the results of a title search performed by a professional title company or attorney. The policy is paid for with a one-time premium at the time of property purchase and remains in effect for as long as the insured party or their heirs have an interest in the property.
WHY DO YOU NEED IT?
If a problem arises with the title after the purchase, the title insurance policy provides coverage for legal defense fees, settlement costs, and any financial losses up to the policy’s coverage limit. This coverage can be invaluable in protecting the investment in a property, as well as providing peace of mind to the property owner and lender.
Title insurance is commonly required by mortgage lenders as a condition of loan approval, as it helps mitigate the risk associated with potential title issues. While the property owner’s policy protects the buyer, lenders usually require a separate lender’s policy to safeguard their own interests.
In summary, title insurance safeguards property owners and lenders against financial losses due to defects or problems with the title of a property. It provides protection, legal defense, and financial compensation for issues that may not have been discovered during the initial title search, ensuring a secure and clear ownership of the property.