Understanding Title Insurance and Why You Need It?

May 25, 2017

Title insurance isn’t something that many people consider, or even know about, until they’re purchasing a home. However, title insurance is important. Here’s what title insurance is, and why you need it.

Title Insurance Protects You in Multiple Ways

The title chain of a property consists of records of every time someone purchased or sold the property. These records exist in public archives, but aren’t always easily accessible to people outside the real estate industry.

The title will also list recorded problems with the property and defects. In addition, it will have information on whether the property has any liens or levies against it.

Title insurance helps to protect against the possibility of such issues coming up and costing you. It does this in two main ways.

1. Title insurance makes sure the title is free and clear

The title insurance service will research the title to make sure the seller fully owns the property. If liens exist, the insurance company can let the buyer know. This can prompt you to demand a lower asking price or to demand the seller take care of the lien before closing.

The service will also check to see if anyone else has a claim to the property, such as lenders, heirs, and others. This research can also help to eliminate the possibility of any real estate fraud by the seller.

2. Title insurance insures you against claims and challenges

Without title insurance, you would find yourself at the mercy of the court if someone says they partially or fully own the property. If the person making the claim proves they own the property, you will not receive reimbursement for your down payment or any other payments.

Title insurance can pay to help defend you in court. It can repay you for the equity you’ve already put into the property.

Title Insurance Isn’t All the Same

When it comes to title insurance, there are various options. Sometimes, your lender may require it. Look for insurers with a good reputation, and those that can explain how the process will work for your specific situation.