Frequently Asked Questions
When you’re buying a property, you’ll no doubt hear the topic of title insurance come up from time to time. If you find the term a bit confusing and want to understand it better, no worries! You are most certainly not alone. After all, a home is one of the biggest investments most of us make in our lives, so it is important to understand the transaction as much as possible.
To help you on your way, we’ve compiled some Frequently Asked Questions (FAQs) about title insurance. As you may know, a title establishes your rights to use your property and own it, and also specifies any limits to those rights. Now let’s take a closer look at why you would want title insurance.
What is Title Insurance?
As a homebuyer, you want to protect your investment; title insurance is a policy that does just that. With title insurance you not only protect your investment in your new home or property but you also protect your rights to that property. Title insurance comes in two forms: a lender’s policy, which is required to protect the mortgage lender and an owner’s policy which offers the best protection for you, the buyer.
Why do you need title insurance?
Should I purchase owner’s title insurance?
To put it simply, owner’s title insurance protects you and your property purchase. If title defects come to light after you’ve bought the property, which does happen, you could find yourself battling legal issues related to ownership of the property. For example, an undisclosed heir to the property could lay claim to it. An estranged spouse could come forward and claim ownership. Or there could be liens and encumbrances against the property that you don’t know about. Fraud, forgery, legal action and paperwork errors could also come to light.
Revealed after you’ve bought the property, these can create massive legal hassles and can keep you from doing what you wish with your investment. Owner’s title insurance will cover any related court costs or legal fees that come up for claims covered under your policy.
Who picks the title insurance company?
Does my new construction home need title insurance?
YES. When purchasing a new home, you may think that title insurance isn’t necessary. After all, there is no title history, so there should be no title defects, right? It’s a logical conclusion, but the truth is far more complex.
When you buy a newly-constructed home, you may assume you are the first property owner. However, when it comes to the land itself, there may have been numerous property owners, and the parcel may be part of a larger plot of land. Title protection will dig up any liens that exist on the undeveloped land you hope to purchase. In addition, a land survey will define the property boundaries for you, so there are no surprises. It’s a concern particularly in a new subdivision, so there are no disputes about where the properties are subdivided.