Title insurance can be a highly beneficial form of protection in today’s real estate market. As in many industries, nefarious people can easily take advantage of you if you lack title insurance.
According to the National Association of Insurance Commissioners, title direct premiums in the United States totaled $14.8 billion in 2018, a 0.8% increase from 2017. The U.S. Census Bureau and the Department of Housing and Urban Development also reported last year that new home sales in 2018 increased by 3% year-over-year. The title insurance industry continues to experience significant profits, and for a good reason: homeowners — especially first-time owners — like to protect themselves from financial loss.
Here is how title insurance works.
Types of Policies
Title insurance essentially serves as a type of indemnity insurance that shields the holder against loss suffered due to defects in a property’s title (a legal document like a deed that certifies ownership). Common title defects include liens, encumbrances, public record errors, and outstanding taxes.
As for the types of insurance title policies, many title companies generally offer at least two distinct levels of coverage: standard (basic) and extended. The former type of policy usually covers forgery and impersonation (illegitimate signatures on documents), or previous liens and easements, erroneous legal descriptions, an improperly recorded deed, and the lack of a right of access.
Meanwhile, extended coverage provides protection from defects like off-record matters (e.g., claims for adverse possession), a deed to land with buildings that encroach on another person’s property, incorrect surveys, mechanics liens, and pre-existing violations of subdivision laws or zoning ordinances.
Protection Against Potential Risks
Other types of insurance policies can offer protection against risks like post-policy forgery, post-policy construction of improvements by a neighbor, forced removal of improvements stemming from a lack of building permit, and dimensions and location of insured land.
One common risk a homebuyer can face if he/she decides not to purchase title insurance is becoming responsible for back taxes that the prior owner left unpaid. In the event a borrower defaults on mortgage payments and there are problems with a property’s title, the lender would remain covered up to the amount of the loan.
Who Pays for Title Insurance?
The party that bears the responsibility of paying for both title insurance policies (the lender’s and the buyer’s) varies by state, and can even change from one county to the next. In some cases, a discount can be applied. The cost of title insurance also typically varies according to a property’s value.
How Long Does Title Insurance Last?
Title insurance is only paid once and it can cover you as long as you retain an interest in a covered property. Should you die, your coverage automatically stays for your heirs to enjoy. In the event that you decide to sell your home and grant the buyer warranties of title, you can still be covered by title insurance.
Always be sure to research a lending institution, an underwriter, and a title insurance company to evaluate each entity’s reputation. In the case of the underwriter, verify its financial solvency with ratings companies (e.g. Fitch Ratings, A.M. Best Co.).
Contact the Experienced Fairfax Title Company
Speak to the experienced professionals at Mathis Title Company in Fairfax, Virginia, to learn more about the benefits of title insurance. Mathis, which provides both real estate settlement services and legal advice through their counsel, serves most areas in Virginia.
Robin Mathis, who was sworn into the U.S. Supreme Court, boasts more than 30 years of experience and is well-versed in the buyer, the seller and lender sides of real estate transactions. She has dealt with thousands of closings, both small commercial and residential.
Ann Andreatos is a meticulous title agent with more than 15 years of experience in the closing industry. During the home buying process, Mathis’s professionals will typically hold funds being transferred in an escrow account prior to the title transfer and closing. Once the title order has been approved, an examiner will conduct a title search in order to ensure a clean title transfer, a process that includes the provision of a preliminary report. Finally, funds are disbursed for transfer and the title insurance policy is formally created. Mathis Title also relies on the experienced underwriters from Old Republic National Title Company, North American Title and Stewart Title.
Call Mathis Title Company today at (703) 865-7880 or contact them online for more information about their services.