Buyers are often confused about title insurance, and it’s understandable. That’s because there are two different types of title insurance. And as an informed buyer, it’s wise to understand the difference.
It doesn’t. This title insurance is strictly for the lender’s benefit. Called lender’s title insurance, the borrower purchases it to protect the lender.
Should legal issues arise with your property, your mortgage lender is covered but you, the buyer, are not.
What is Meant by Title Insurance?
So, what exactly is a “title”? Title refers to legal ownership of a property. Whenever a property changes hands, the title changes to the new owner. It’s entirely possible that in the chain of transfers, a defect can occur.
The closing agent for your property will conduct a chain of title search to make sure it’s clear. However, the search cannot protect you from a nefarious intent from a previous owner.
That defect could be an oversight, or it could be deliberate such fraud, unpaid liens, taxes, etc. Lender’s title insurance protects your lender from these defects.
Only owner’s title insurance can protect the buyer from the most common forms of title defects.
Do I Really Need Owner’s Title Insurance?
A title insurance policy protects the biggest investment you’re likely to make in a lifetime. No one ever wants to experience a dispute of ownership and face legal fees to protect your investment!
Owner’s title insurance, a one-time fee paid at closing, offers legal protection in case someone files suit with a claim to the deed to your property.
While you are not required to purchase owner’s title insurance, it’s an excellent idea to do so. Here’s a short list of just some of the most common kinds of claims:
Property line disagreements
The discovery of undisclosed lawsuits or liens against your property
Seller disputes about whether you had a right to buy the property
How Long is Title Insurance Good For?
This crucial insurance can save you possible legal battles for a property you’ve worked hard to own! Protect your investment and your sanity by including homeowner’s title insurance as part of your closing costs.
When you’re ready to close on a house, turn to Lilly Title & Settlement, a woman-owned business, for your closing and title insurance needs.
To get more info, visit our Title Insurance FAQ's page!