Protecting Your Rights

TITLE INSURANCE- Everything that you need to know.

Title insurance is the only coverage of its type and offers coverage that protects your financial interest and rights to ownership of your new property. Title insurance is a coverage that is paid for only once (at the time of purchase) and lasts as long as you, the policyholder – or your heirs – have an interest in the insured property. In some instances, this coverage may even be applicable after you have sold the property.

The way title insurance works is very different in comparison to other types of insurance policies, such as homeowner’s insurance, life insurance, car insurance, etc. Unlike most other types of insurance policies which protect against losses resulting from events that occur after the policy is issued, title insurance protects against losses from claims that may have developed prior to the date of the policy. Coverage ends on the day the policy is issued and extends backward in time for an indefinite period.

So why should you purchase title insurance and is it really necessary? We’ve dedicated this entire page toward helping explain the benefits, protection, affordability, and ease of purchasing title insurance. To answer the question though, we recommend purchasing title insurance 100% of the time. Please read on to find out why.

Title insurance is your ONLY defense against potential title disaster.

When you purchase a home, you will likely select a variety of insurance policies to protect your home and personal property. Some of this coverage, such as homeowner’s insurance, may even be required by mortgage lenders to help ensure that your mutual investment is protected. Homeowners insurance; for example, serves to protect you both against loss from fire, theft, or wind damage. Flood insurance, on the other hand, protects against damage from nature due to rising water. There are even policies that protect against damage from dysfunctional storm drains and sewer damage. To maintain protection over time, each of these policies require that you continue to pay for coverage as time goes on. If you choose all of the above types of coverage, why would you need title insurance? Title insurance is the only coverage of its type and offers coverage that protects your financial interest and rights to ownership of the home. Title insurance is a coverage that is paid for only once, at the time of purchase and it lasts as long as you, the policyholder – or your heirs – have an interest in the insured property. In some instances, this coverage may even be applicable after you have sold the property.

“So, do I really need title insurance?” Yes. Just like you really need car insurance. And, not unlike other insurances, if you need coverage and don’t have it, it’s too late. The good news is that title insurance is the most inexpensive, long-term coverage you will likely encounter while owning your home.

What will title insurance actually do for me?

New ownership of a property begins with a search of all available public records that surround the property being considered for purchase. Once the records are gathered, an examination is performed by the title agent to determine if the property is both legally transferable and insurable. Most title agencies perform a 30-year search on all history related to a property. Very frequently, there are concerns that present themselves in the findings of a title search. Examples of potential issues include:

Mortgages that have not been released
Judgements, liens, or potential legal action involving the property
Improperly recorded or misleading deeds, wills, or trusts
Documents executed under false or expired powers of attorney
Notary related issues or defective notary acknowledgements related to past recordings
Unpaid property taxes
Incorrect legal descriptions
Undisclosed heir(s)
Errors in tax records
Incorrect representation in marital status
Easement related concerns
Capacity of Foreign Fiduciaries

Most potentially harmful pitfalls are identified in the title examination when reviewing the history of ownership (or chain of title) and is generally corrected prior to moving forward with the transaction. That being said however the findings during an examination are only as reliable as the accuracy in which the documentation has been recorded. Sometimes, even the most careful, detailed, preventative research cannot locate every potential issue that might exist with a property title, which unfortunately may later result in financial distress and threat of ownership to the new owner of a property. Title insurance is easily inclusive as part of your closing fees and is your only chance at mitigating loss or damage from any potentially hidden threat that might unknowingly exist.

What type of title insurance do I need?

The process of purchasing title insurance is one of the most simplistic of any insurance that you will ever purchase, in fact, our title company will handle this entire process for you. There are only two types of title insurance, but each is intended for very different parties, each protecting a different type of policyholder-

Lender's Policy- Which, as the name suggests, protects the lender or investors interest in a property. This policy does not offer any type of protection to a buyer or owner of a property.
Owner's Policy (which is what a buyer would purchase)- Covers the policy holder (and any potential heir) as long as ownership is maintained in the property. Just as a lenders policy does not cover the buyer of a property, an owner’s policy offers no protection for a lender or investor.

Even though you may not realize it, similar to how a lender will require homeowner insurance, nearly every mortgage lender will also require title insurance as security for their investment into your property. Their coverage is included as a portion of closing costs when someone finances a new property. Consider this viewpoint- if this protection is this crucial to every lender, shouldn’t it be equally as important to the property owner?

How do I purchase a title insurance poiicy?

Just let us know that you are interested and we will take care of the rest! A few things that we all enjoy about title insurance is that there is no lengthy process, no difficult decisions, very little additional paperwork, and no additional work required on your part. Better still, you don't even have to pay anything out of pocket at closing, it's simply included as a portion of your closing costs.

How much does title insurance cost?

The price of a title policy will vary somewhat based on location and any specific endorsement(s) that the lender might require. The biggest influence on price, however, is purchase price or loan amount of the property being acquired. Generally, most title insurance policies run anywhere from a few hundred to a couple of thousand dollars and is one of the smaller expenses associated with the purchase of your new property. Just because it is inexpensive in the grand scheme of things, doesn’t mean it isn’t very important- this policy helps protect one of your most expensive investments!

When you purchase a title policy, a one-time payment is made generally at closing. This expense becomes a part of your closing costs, so no money is required out of pocket to ensure that you are protected.

If you are interested in getting a quote, you can contact our office, we’d be happy to assist. You can also get a general idea of the cost through one of our underwriters, Fidelity, but keep in mind that the quotes established through Fidelity’s rate calculator are estimates only and may not accurately reflect the actual charges. However, these amounts are generally very close, if not on par.

I was told that I really don't need title insurance...

Sometimes, in an attempt to save a buyer a few dollars, industry folks may recommend against purchasing title insurance. In the event that this occurs, we would suggest that you keep these three things in mind-

A title search (and the reported findings) are only as accurate as the folks that performed the prior work; people are far from perfect and mistakes are sometimes made. What isn't found can not be reported, that doesnt mean issues may not exist or that misfilings are not valid;
Once you close on a property, you inherit all of the costs associated with said property. Should some unfortunate instance arise in the future, it is very unlikely that they individual who provided you with the advice to pass on the title insurance will step in to assist financially to help resolve any legal issue that might occur. In fact, they know that title issues have nothing to do with a lender, inspector, or your real estate professional. They also understand that working through legality issues is anything but inexpensive. Once your sale is complete, they are generally removed from any responsibility associated with your transaction;
If it’s good enough for the lender, it should be good enough for you. Every lender requires a lender's policy to protect their own interests. Take it from the financial guys, buying title insurance shouldn’t be optional!