Why Do You Need A Title Insurance? Read The List Below to Know.

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What Is Title Insurance?
Title insurance is protection against loss arising from problems connected to the title to your property.
Before you purchased your home, it may have gone through several ownership changes, and the land on which it stands went through many more. There may be a weak link at any point in that chain that could emerge to cause trouble. For example, someone along the way may have forged a signature in transferring title. Or there may be unpaid real estate taxes or other liens. Title insurance covers the insured party for any claims and legal fees that arise out of such problems.

It is if you need a mortgage, because all mortgage lenders require such protection for an amount equal to the loan. It lasts until the loan is repaid. As with mortgage insurance, it protects the lender but you pay the premium, which is a single-payment made upfront.

What is lender’s title insurance?

Lenders title insurance protects your lender against problems with the title to your property-such as someone with a legal claim against the home. Lenders title insurance only protects the lender against problems with the title. To protect yourself, you may want to purchase owners title insurance.

Lenders title insurance is usually required to get a mortgage loan. Lenders title insurance protects your lender against problems with the title to your propertyfor example, if someone sues to say they have a claim against the home. Lenders title insurance does not protect your investment in the home (your equity). If someone sues with a claim against your home, you are the first person responsible. The lenders title insurance policy only covers claims that affect the lenders loan. To protect your equity in the event of a title problem, you may want to purchase an owners title insurance policy.

What kinds of policies are there?

What’s covered depends upon your policy. If you purchase only lender’s title insurance and end up losing your home to a previously unknown lien, your mortgage will be paid off. That’s the good news. The bad news is that you won’t get anything to cover the payments you’ve made, including the down payment. You’re out a house. That’s why experts advise buyers to get an owner’s policy as well.

Owner policies come in different flavors. A standard policy will generally cover you up to the purchase price of your home. If you want to protection that will cover inflation, you’ll want an enhanced policy or an inflation rider. That also provides coverage for liens filed after your closing date. Say, for example, you buy a new home and at closing everything is clear. The next day, a subcontractor who worked on construction of your home files a mechanic’s lien. Without an enhanced title insurance policy, you aren’t covered and may end up paying the subcontractor. It’s up to you to look at coverage and decide which owner’s policy you want to purchase.

What Could Happen If You Don’t Get Title Insurance?

Here’s how things could go wrong. At the most extreme, the seller may knowingly try to sell you a home he or she doesn’t own. There have been instances of renters posing as sellers. However, typical title issues are less worthy of a crime show, but more complicated. For example, the seller might have co-purchased the house ten years ago with a brother he hasn’t talked to since and is unaware that he now needs his brother’s signature to sell. Or a problem might be lurking in the more distant past. For example, the seller might have bought the place from a single woman, not realizing that her ex-husband still co-owned the property and hadn’t signed off on the sale as required. Or the seller might have inherited the house under the terms of a will that — oops — turns out to have been out-of-date and a more recent will leaves the house to someone else.

Not all title problems involve the whole house. For example, liens may have been filed against the house — that is, people or agencies may have, within the public records, legally claimed the right to be paid from the proceeds of the property’s sale, in order to settle the owner’s debt to them. Typical debts include taxes, child support, and contractor’s fees. These liens stick to the house like glue, until the house is sold or foreclosed on.

In any of these situations, title insurance will step in to help. One important note on co-op housing: If you’re buying a co-op, where you won’t actually own real estate (just shares in a corporation), no title insurance is needed.

Artesian Title

Florida Title Insurance Company