Protect your Investment
Purchasing a home is often the single largest investment you’ll make in your lifetime. Owner’s and Lenders Title Insurance policies protect that investment for both buyers and lenders against hidden risks created by liens, encumbrances, and defects in the title.
Owner’s Mortgage Title Insurance Policy
Do I Need an Optional Owner’s Title Insurance Policy?
We, and industry professionals and analysis certainly believe so. Title Insurance is a means of protecting yourself from financial loss in the event that problems develop regarding the rights to ownership of your property. There may be hidden title defects that – sometimes – even the most careful title search will not reveal. In addition to protection from financial loss, title insurance pays the cost of defending against any covered claim.
Also, keep in mind that title insurance is a one-time purchase that stays with you as long as you or your heirs own the home. When thinking about how expensive a home can be, and the possibility of significant loss, and then how low this one-time insurance purchase costs by comparison, there is really no insurance like it.
It’s a no-brainer.
How will Owner’s Title Insurance protect me?
Some common examples of problems covered by an Owner’s Title Insurance Policy include:
• Improper execution of documents
• Mistakes in recording or indexing of legal documents
• Forgeries and fraud
• Undisclosed or missing heirs (including divorces of previous owners of the home)
• Unpaid taxes and assessments
• Unpaid judgments and liens
• Unreleased mortgages
• Mental incompetence of grantors on the deed
• Impersonation of the true owners of the land by fraudulent persons
• Refusal of potential purchaser to accept title based upon condition of title
*Also, sometimes sellers of a home are either unaware of issues, or are not being forthright about them.
What can make the Title to my home defective?
When you purchase your home, you take “title” to your property. Any number of problems that remain undisclosed after even the most meticulous search of public records can make a title defective. These hidden “defects” are dangerous indeed because you may not learn of them for many months or years. Yet they could force you to spend substantial sums on a legal defense and still result in a potential lawsuit, significant financial loss, or even the loss of your property. In worst-case scenarios, you can experience “D – all of the above.”
Won’t the Lender’s Title Insurance Policy protect me?
No, there are two types of Title Insurance; the lender’s policy, and the owner’s policy. Your lender very likely will require that you purchase a Lender’s Title Insurance Policy on their behalf. This policy only insures that the lender has a valid, enforceable lien on the property. Most lenders require this type of insurance, and typically require the borrower to pay for it.
An Owner’s Title Insurance Policy, on the other hand, is designed to protect you from title defects that existed prior to the issue date of your policy. Title troubles, such as improper estate proceedings or pending legal action, could put your equity at serious risk. If a valid claim is filed, in addition to financial loss up to the face amount of the policy, your Owner’s Title Insurance Policy covers the full cost of any legal defense of your title.
Also, keep in mind; lenders and/or banks are not foolish; they are aware of statistics, and the possibilities of title problems. And when these issues arise, they can be significant. As a result of this knowledge, the lenders mandate that you purchase title insurance for their interest, almost every time. They will rarely not close a transaction without it. Lenders and banks believe in title insurance, and for good reason. However, their policy does not apply to your protecting your interest in your property.
How much does Title Insurance cost?
The one-time premium is directly related to the value of your home. Typically, it is less expensive than your annual auto insurance. Often, it’s roughly one-half to one percent of the final sales price. Here’s the great part; it is a relatively low, one-time only expense, paid when you purchase your home. Yet this title policy continues to provide complete coverage for as long as you or your heirs own the property.
In 2012 alone, our industry paid out over $908 Million in claims. These claims were covered by having title insurance coverage. Imagine the losses that would have been incurred to these property owners, had they not had this simple, one-time, low-cost title insurance policy, which stays with you and your heirs for as long as you own the home.