Title Insurance
In short, title insurance is important to you because it protects your investment if you're the buyer.
Title insurance is one of the most important items you can purchase to safeguard the biggest investment you will probably ever make – buying a home. It protects the homebuyer and the lender from the possibility that the seller, or previous sellers, did not have clear title to the property and can’t correctly pass the property on to your client.
Once your client’s purchase contract is ratified, the title company will search the local title records to determine the property’s “chain of title.” Specifically, they closely examine title documents to determine insurability, checking any issues that must be resolved before the property can be sold. These can include paid but unreleased mortgages, judgments outstanding against people with similar names, estate/will claims and mechanic’s liens (a previous owner failing to pay for work done on the home).
Although a title search is performed and analyzed by the title company, unforeseen defects in the title can appear later. A title insurance company insures against losses resulting from covered title defects. For example, the seller may have purchased the house from a single woman, not realizing that her ex-husband, who was a co-owner of the home, did not sign off on the sale as required. The ex-husband could later place a legal claim on the rights to the property. Owning a title insurance policy will cover the costs and fees associated with defending the claim.
What could happen without title Insurance?
The risks of not having title insurance can be compared to the risks of not having health insurance. Imagine that to get health insurance, you must first go to a doctor for a check-up. The doctor gives you a clean bill of health so you decide not to purchase health insurance. Being healthy now doesn’t ensure you’re going to stay healthy. Health insurance would cover you if future health issues arise and similarly owner’s title insurance would cover you if any future title defects arise. Just because a title search was completed does not mean title problems couldn’t potentially surface in the future. Without title insurance, you could be faced with significant legal fees, costs, and even the loss of all, or a portion of your land or home.
Given the potential risks, title insurance is a wise investment for anyone when buying a home. If you have questions about or are in need of title insurance, contact one of the Long & Foster Settlement Services’ Core Partners. When you work with the Long & Foster Settlement Services team, you can rest assured your closing will go smoothly and your investment will be well protected.
Did you know there are different types of Title Insurance?
Lender’s Title Insurance
As a condition for obtaining a loan, lenders require that borrowers purchase a title insurance policy to provide lender protection in the event of a title defect.
Owner’s Title Insurance – Standard and Enhanced
An owner’s title insurance policy is paid at settlement as a one-time only premium and can offer your client added peace of mind knowing that the title to their investment is insured. They can choose a standard or enhanced title insurance policy, so it is important that they be aware of the protection provided by both policies to make an informed decision.
Title insurance is one of the most important items you can purchase to safeguard the biggest investment you will probably ever make – buying a home. It protects the homebuyer and the lender from the possibility that the seller, or previous sellers, did not have clear title to the property and can’t correctly pass the property on to your client.
Once your client’s purchase contract is ratified, the title company will search the local title records to determine the property’s “chain of title.” Specifically, they closely examine title documents to determine insurability, checking any issues that must be resolved before the property can be sold. These can include paid but unreleased mortgages, judgments outstanding against people with similar names, estate/will claims and mechanic’s liens (a previous owner failing to pay for work done on the home).
Although a title search is performed and analyzed by the title company, unforeseen defects in the title can appear later. A title insurance company insures against losses resulting from covered title defects. For example, the seller may have purchased the house from a single woman, not realizing that her ex-husband, who was a co-owner of the home, did not sign off on the sale as required. The ex-husband could later place a legal claim on the rights to the property. Owning a title insurance policy will cover the costs and fees associated with defending the claim.
What could happen without title Insurance?
The risks of not having title insurance can be compared to the risks of not having health insurance. Imagine that to get health insurance, you must first go to a doctor for a check-up. The doctor gives you a clean bill of health so you decide not to purchase health insurance. Being healthy now doesn’t ensure you’re going to stay healthy. Health insurance would cover you if future health issues arise and similarly owner’s title insurance would cover you if any future title defects arise. Just because a title search was completed does not mean title problems couldn’t potentially surface in the future. Without title insurance, you could be faced with significant legal fees, costs, and even the loss of all, or a portion of your land or home.
Given the potential risks, title insurance is a wise investment for anyone when buying a home. If you have questions about or are in need of title insurance, contact one of the Long & Foster Settlement Services’ Core Partners. When you work with the Long & Foster Settlement Services team, you can rest assured your closing will go smoothly and your investment will be well protected.
Did you know there are different types of Title Insurance?
Lender’s Title Insurance
As a condition for obtaining a loan, lenders require that borrowers purchase a title insurance policy to provide lender protection in the event of a title defect.
Owner’s Title Insurance – Standard and Enhanced
An owner’s title insurance policy is paid at settlement as a one-time only premium and can offer your client added peace of mind knowing that the title to their investment is insured. They can choose a standard or enhanced title insurance policy, so it is important that they be aware of the protection provided by both policies to make an informed decision.
- Standard title insurance: Primarily covers only issues that occurred prior to the date the policy was issued for defects such as:
- Improperly executed documents, third party claims to an interest in title and defective recording of documents.
- Enhanced Title Insurance: Most popular option covering any title defects that occurred prior to and after the date the policy was issued. Post-settlement forgery, mechanic’s liens, coverage up to 150% of the home’s purchase price and the ability to pass the home to heirs with purchasing a new owner’s title insurance policy
