Why You Need Title Insurance When You Buy a Home


Title insurance protects homebuyers from financial loss caused by problems with the title of the property. It covers past events and is different from other types of insurance. There are two types of title insurance – lender's and owner's – and it is recommended that homebuyers purchase owner's title insurance. A title company will perform a title search to check for potential problems and resolve them before issuing a policy. However, some defects may not be detected, and title insurance can protect against them. Although it may seem like an extra expense, title insurance can save homebuyers a lot of money and hassle in the long run.

If you are planning to buy a home, you may have heard of title insurance. But what is it and why do you need it?

A couple at a table with a title insurance agent discussing the need for title insurance

Title insurance is a type of insurance that protects you from financial loss due to problems with the title of the property you are buying. The title is the legal document that proves your ownership of the property. It shows the history of the property, such as who owned it before, how it was transferred, and if there are any liens, easements, or other encumbrances on it.

Title insurance is different from other types of insurance because it covers past events, not future ones. For example, if someone claims that they have a right to your property because they are a long-lost heir of a previous owner, or if there is an unpaid tax lien on the property that you were not aware of, title insurance will cover the legal costs and damages that may arise from these claims.

There are two kinds of title insurance: lender’s title insurance and owner’s title insurance. Lender’s title insurance is required by most mortgage lenders to protect their interest in the property in case there is a defect in the title. Owner’s title insurance is optional but highly recommended to protect your own interest in the property. You only pay for title insurance once, at closing, and it lasts as long as you own the property.

Before issuing a title insurance policy, a title company will perform a title search to check for any potential problems with the title. They will look at public records such as deeds, mortgages, court judgments, tax records, and other documents to verify the ownership and legal status of the property. If they find any issues, they will try to resolve them before closing or disclose them to you.

However, even with a thorough title search, some defects may not be detected or may arise after closing. For example, there could be errors or omissions in the records, fraud or forgery in the documents, undisclosed heirs or spouses of previous owners, or mistakes in the survey or description of the property. These are some of the risks that title insurance can protect you from.

Title insurance may seem like an extra expense when buying a home, but it can save you a lot of money and hassle in the long run. Imagine if you found out that someone else has a claim to your property after you have moved in and invested in it. You could end up losing your home or having to pay a large amount of money to settle the dispute. Title insurance can give you peace of mind that your ownership rights are secure and that you will not be held liable for any problems with the title that were not your fault.

If you have any questions about title insurance or need help finding a reputable title company, please contact me today. I would be happy to assist you with your home buying process and make sure that you get the best protection for your investment.

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