Q & A on Title Insurance- I'm an Atlanta real estate agent and find that my home buyers often have these questions before closing.
What's title insurance? It's meant to protect the owner's or lender's financial interest in real estate.
Whose interest does it protect? Lender's title insurance protects the lender and Owner's title insurance protects the home buyer for as long as they own the home.
Who pays for it? When a buyer is getting a loan, they pay for both the Lender's title policy and the Owner's title policy. It's a one time fee at closing. If there is no loan and it's an all cash transaction, then only Owner's title insurance is recommended.
If I have Homeowner's Insurance, do I still need Title Insurance? Yes, they insure 2 very different things. Homeowner's Insurance insures the contents and the building. Title Insurance insures your financial interest in the home.
If there's a title search and it's clear at closing why do I need it? Clear Title means that the closing attorney didn't find any liens on the property before closing and the seller is the legal owner with the right to sell the property, I heard an attorney say that 1 out 5 homeowner's end up using their title insurance. Things don't always show up in the initial search before the closing.
Is Title Insurance required? Lenders require the buyer to purchase it to protect the Lender's interest in the property. Owner's title insurance is not required, but I highly recommend it.
I highly recommend Owner's Title Insurance for several reasons. Years ago when I bought my first Atlanta condo, months after I closed, I received a letter from the city saying that back taxes were owed on the property. For whatever reason, the back taxes didn't show up before closing in the Title Search. Thankfully I had paid a few hundred dollars at closing and it saved me thousands of dollars.
Last year, I had a buyer client buy a foreclosure in a swim tennis community. Several months later, she received a letter stating that back Home Owner Association dues were owed. Once again, it was in the thousands of dollars. My buyer called me asking what to do. I reminded her that she was fine because of the Owner's Title Insurance she purchased at closing.
Within a few weeks after closing, home buyers receive the Owner's Title Insurance policy in the mail from the closing attorney's office. Put it in a safe place. If something comes up after closing, that policy information will be needed.
For more information on home buying in Georgia, contact Jen Bowman, Realtor and Broker Associate with Keller Williams Realty Atlanta Partners at 404-456-5024.