Why do I need Title Insurance?
Even the most detailed examination of title by a real estate attorney is not a guarantee that all problems or issues in a chain of title have been identified or resolved. Hidden risks can result in costly lawsuits and legal fees. Our title searches reveal issues in many transactions, and we take steps to correct as many defects as possible. However, not all defects can be discovered through traditional title searches of property records and not all defects can be corrected.
OWNER’S TITLE INSURANCE
The Owner’s Title Insurance Policy is a one-time premium, and protects the homeowner for as long as the homeowner owns the property. If the title or ownership of your home or real property is challenged based on a covered item, the title insurer will pay to defend against the challenge and will either “perfect” (make perfect) the title or pay damages caused by a valid claim. In most jurisdictions, the buyer is entitled to receive a discount called a “reissue rate” when the seller provides the title company with a copy of their Owner’s Title Insurance Policy (some time restrictions and limitations may apply depending on the title insurer).
An Owner’s Title Insurance Policy protects against the following risks:
- Clerical errors made at the Registry of Deeds
- Forged deeds, mortgage releases or other forged documents
- Deeds made by incompetent persons
- Falsification of records
- Deeds made by minors
- Previously undisclosed heirs and previous owners
- Improper legal description
- A deed executed using an expired or invalid power of attorney
- Title taken as a result of an improperly probated will
- False representation of the true owner of the property
- Improperly indexed liens on the property
- And much more!
Basic vs. Enhanced Title Insurance Comparisons
LENDER’S TITLE INSURANCE
Most institutional lenders require title insurance for the amount of the loan, but this insurance only covers the lender, not YOU. To be covered by title insurance a homeowner must purchase a separate owner’s title insurance policy. The cost of the lender’s title insurance policy, except for a nominal charge, is included in the cost of the owner’s title insurance policy when purchased simultaneously. In addition, after purchasing an owner’s title insurance policy, in most jurisdictions, the property owner is entitled to receive a discount called a “reissue rate” when the owner refinances their loan (some time restrictions and limitations may apply depending on the title insurer).