What is Title Insurance?
The real estate closing process and the procedures that detail your property purchase are handled by your title company. Discover the elements of your closing here.
When you agree to purchase property, the first step is your contract. That contract is reviewed, amended, and then executed by your title insurance company. Our job is to make sure that all conditions have been satisfied and that the contract is executed as intended to facilitate a smooth transition of property ownership.
To ensure that the seller of your property has a legal right to the transfer of ownership, we will search and document the history of your property. If we find issues with the chain of custody or details within the deed, we will remedy these issues. But this doesn’t mean you should skip a title insurance policy. Ownership claims are a complex legal situation.
While we will work hard to validate your claim to your property, the fact of the matter is that a claim can still be made against your property while you own it. Title insurance protects you by covering the costs to fight and settle any potential claim against your property and is even extended beyond the lifetime of your ownership to the ownership of your heirs.
Potential future title claims can include, but certainly are not limited to, unpaid mortgages, real estate taxes, and maintenance dues; unpaid municipal liens, code violations, open or expired building permits; false impersonation of Owner of the property; forged deeds, satisfactions of mortgage, release of lien; deeds by minors, or persons supposedly single, but actually married; gaps in the chain of title; forged or misinterpreted wills; undisclosed heirs, beneficiaries; and invalid legal documents.
Separate from your Owner’s Policy, if you obtain a mortgage from a bank, your lender will hold a Lender’s Policy. A Lender’s Policy protects their investment in your property over the life of your mortgage. While title insurance claims are rare, they can have disastrous consequences. It is highly recommended that property owners also have the protection of an Owner’s Policy to ensure the integrity of their right to own their property.
Unlike most insurances you are probably familiar with, such as automotive or renter’s insurance, title insurance does not come with a recurring fee. Title insurance is a one-time fee that is added to the closing costs and covers the property owners and their heirs for the life of their ownership of the documented property.