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8 Things You Need to Know About Title Insurance

by | Nov 15, 2018 | Blog

Title insurance can be confusing for many people—particularly since mention of it occurs in the midst of a traditionally overwhelming time, when you are buying or selling a home. To prepare you for that eventuality, we’ve pulled together some basic facts about title insurance: things you should know to empower yourself to make the best decisions.

 

Title insurance: when you’re in the know, you get it

When you have a basic understanding of title insurance, how it works and how it protects you, you also know how essential it is to protecting your investment in your home. So let’s get down to it; here are eight things you simply must know about title insurance.

 

1. Properties have a long history which can sometimes complicate ownership

When you are ready to purchase a property, you want to make sure there’s nothing to keep you from owning it and using it as you want. Title insurance protects you from such things—known as title defects. It’s valuable peace of mind that your investment will be protected if it comes to light that there is a lien against the property or an undisclosed heir claims ownership, among other potentially complex issues.

 

2. Title insurance is different than most other types of insurance

Unlike fire insurance or car insurance, which protect you after an incident occurs, title insurance protects you from things that have already happened throughout the history of the property. Uncovering these issues on your own would be next to impossible, which is why a title search is conducted by your title insurance company.

 

3. You may be required to have title insurance, but you can choose your title insurance company

Although you may be required to have title insurance, you have the freedom to choose the title insurance company with whom you want to work. That means you can choose a company you know and trust. It also means you can do some price comparison before you make your decision.

 

4. Many can have an interest in a single property

There are so many possibilities for individuals and entities to have an interest in a property. Perhaps a previous owner didn’t pay estate, inheritance, gift or income taxes, so there is a lein on the property. Or a previous owner had a special assessment which has become a lein. Maybe there’s an outstanding mortgage or judgment. Title insurance can protect you from suffering a loss on your investment if someone attempts to hold you accountable for these issues.

 

5. A title search can bring defects to light so they can be rectified

Title defects like those mentioned above can often be uncovered through the title search process when you buy title insurance, so you and your lender know you have a clear title when you take ownership. In many cases, title defects can be rectified before you take ownership.

 

6. There are two types of title insurance: an owner’s policy and a lender’s policy

Most people are required to have lender’s title insurance, which protects your mortgage lender’s interests. You will also have the option to purchase an owner’s title insurance policy, which protects your interests—so you can have peace of mind that your investment is secure.

 

7. Who pays for title insurance can vary

Whether the buyer or the seller pays for owner’s insurance, depends on the state you live in. In Minnesota, the buyer usually pays. In Wisconsin, the seller typically pays. Oftentimes, however, market conditions may give you room to negotiate. Ask your Realtor for guidance.

 

8. If you get owner’s and lender’s policy from the same company, a discount may be possible

This applies to Minnesota. But title companies in both Minnesota and Wisconsin offer discounts on title insurance for providing a copy of the previous owner’s policy.

 

Title insurance: an investment in peace of mind

When you’re buying a new home or property, you want to know you’ll be able to enjoy it as you intend. Title insurance can give you the peace of mind you want most—the knowledge that, simply put, your investment is yours.

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