Every lender requires title insurance. The company issuing the title insurance policy will research legal records to make sure that you are receiving clear title, or ownership, to the property.
Problems with title can limit your use and enjoyment of real estate you have purchased, as well as bring financial loss. Each year, millions of dollars are involved in title disputes.
Basically, title insurance protects you from losses as the result of claims on the ownership of your real estate. Unlike other insurance policies, such as homeowners and auto, title insurance protects you from things that may have happened in the past.
Title insurers, through an extensive search of the public records, provide you with a detailed list of the claims that other parties may have in the real estate, such as:
- taxes
- liens
- loans on the property
- easements
- the rights of others to use the land
But even the most careful preventative work cannot locate hidden hazards of title. Hidden hazards can show up after you buy your real estate, causing an unpleasant and costly surprise. Title insurance offers you financial protection against these hidden hazards. Examples of hidden hazards are:
- a forged deed that transfers no title to real estate
- previously undisclosed heirs with claims against the property
- instruments executed under expired or fabricated power of attorney
- mistakes in the public records
The cost of title insurance varies. It is a one-time payment that safeguards you against loss arising from hazards and defects already existing in the title. You are protected by title insurance for as long as you own the real estate.
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