Owner’s Title Insurance: What It Is and Why It’s So Vital

Title insurance is probably something you’ve never thought about until you began the process of purchasing a house. It’s actually one of the most valuable types of insurance because it protects buyers from unknown claims of ownership to their new residence. With so much at stake, it’s a smart investment in peace of mind.

Here are seven important things everyone should know about owner’s title insurance.

1. How does owner’s title insurance work?
   When purchasing a home, you’re not actually buying the building or piece of land you’re purchasing the title to the property. That gives you the right to occupy the space. But there’s always the possibility that the seller or previous sellers didn’t have free and clear ownership of the property so they cannot rightfully transfer full ownership. Title issues typically include things like:
   • • Errors in public records
     • Unknown liens
     • Illegal deeds
     • Missing heirs
     • Boundary disputes
     • Forgeries
     • Unknown easements
     • Improperly probated wills

   Without the benefit of title insurance, these situations could result in significant financial loss for you as the buyer, including the possibility of losing your new home.

2. The title search alone is not enough.
   The title insurance company or your attorney will perform a title search before issuing the policy. This involves extensive research of public records concerning the house such as past deeds, wills, divorce decrees, tax records, etc. The process results in a preliminary title report and provides an opportunity to eliminate issues before proceeding with the sale. But even the best title search can’t foresee when a long-lost heir will show up to lay claim to the property or other similar scenarios. And that’s where title insurance steps in to protect you.

3. The risks associated with title issues are very real.
   Although real estate comprises our nation’s largest market sector, the purchase and sale of real property still comes with their share of risk. In fact, the American Land Title Association reports that a shocking 36% of all real estate transactions include a defect in the title.

4. Title insurance is unlike most insurance policies.
   Title insurance protects against past problems while traditional insurance applies to future risk. Also, the owner’s title insurance policy is a one-time purchase. There are no ongoing premiums.

5. The lender’s policy and the owner’s policy are not the same.
   Your lender will require that you buy a lender’s policy to cover its investment. However, the lender’s policy only covers the outstanding amount of the loan at the time a claim is made. You also need to ensure you purchase an owner’s policy to protect your financial interests in the home. When purchased together, the owner’s title insurance policy is a relatively inexpensive addition.

6. You still need title insurance for a newly-built home.
   Even in the case of a new build, a title search is still needed to reveal any problems that may have occurred with the previous owners of the land. It uncovers existing liens that can be caused by builders failing to pay subcontractors and includes an official survey of your new property.

7. Title insurance is one of the best investments you can make.
   Title insurers rarely have to pay out on claims but that doesn’t mean the policy is a waste of money. Unlike other types of insurance, title insurance companies incur most of their expenses upfront to help prevent any kind of title shock down the road. In addition, the one-time fee protects your property for as long as you or your heirs own it. The cost of title insurance is relatively low in comparison to the protection and peace of mind it provides.

Fighting a title claim can be expensive, stressful, and time-consuming, so an insurance policy is an indispensable financial safeguard.

For more information about owner’s title insurance and how it can protect your valuable real estate investment, please contact our helpful team of professionals.

About Certified Title Corporation: Since 1994, attorney-owned Certified Title Corporation has been furnishing residential and commercial real estate stakeholders across the nation with robust title insurance, settlement, and escrow services. Renowned for industry-leading reliability and an exemplary level of service and quality, the Maryland-based company helps clients from all walks of life achieve their asset goals. To learn more, call (888) 486-5511 or visit https://www.certifiedtitlecorp.com/.