Title Insurance is an enigma to many homeowners, leaving you to wonder “Do I even need it?” Homeowner’s insurance obviously covers you if anything bad happens to your new home like a fire, so what’s the use of title insurance if your home is already protected?
While your home might be protected from physical damage, homeowner’s insurance does nothing to protect you from outright losing ownership to your home. That’s where title insurance kicks in—it insures the title to your home. There’s a reason you’re required to have lender’s title insurance when you take out a mortgage; your lender is completely aware of the risk of problems occuring that could challenge your claim to the title.
However, lender’s insurance only protects the lender against title challenges; it doesn’t insure you or your heirs in the event of a defect in the title (including but not limited to unpaid bills for labor and material, forgeries, missing heirs, unpaid mortgages, unpaid taxes, etc.).
If you want the same protection for yourself, you’ll want an owner’s title insurance policy, which is a one-time fee and is good for as long as you or your heirs own the property.
Ask yourself these questions:
What if the people signing the deed are not really the owners?
What if someone claims to have a lien on the property and demands that you pay it?
How much will it cost in legal fees to defend your rights?
How can owner’s title insurance protect me?
Some common examples of problems covered by title insurance include:
- Forgeries and fraud
- Undisclosed or missing heirs
- Unpaid taxes and assessments
- Unpaid judgments and liens
- Unreleased mortgages
- Mental incompetence of grantors on the deed
- Refusal of future lender to provide financing based upon condition of title
- Refusal of potential purchaser to accept title based upon condition of title
- Improper execution of documents
- Mistakes in recording or indexing of legal documents
- Impersonation of the true owners of the land by fraudulent persons
Ultimately, it’s your choice whether or not to get owner’s title insurance. But one thing is for sure—it certainly never hurts to have an extra layer of protection on one of your most expensive investments.
At Title Junction we care about helping you stay informed throughout your real estate transaction. Have questions? Give us a call at 239.415.6574.
In case you missed it, check out our last Title Junction post: Questions to Ask When House Hunting