If you are buying a new piece of property, it is wise to plan on buying a title insurance policy as well. This is done to ensure you are protected from any financial fallout that could occur if there is something wrong with your legal claim to your new purchase.
Though a title search is a standard part of closing on a property, there is always a chance something could be overlooked or discovered later, after you own the property. If there are unfortunate issues attached to the title of the property, the effects could be devastating. In the worst-case scenario, you could lose the property and all the money you have already put into it (your equity).
Acquiring title insurance is a streamlined and often simple process that generally goes smoothly when working with a reputable insurance agency. Here are the steps to apply for title insurance that will help you know what to expect:
Asking For The Insurance
The first step in obtaining a title insurance policy for your protection is to request it. This policy is not an automatic part of closing on a property. You, as the buyer, may choose a company and inquire for yourself, but the most common way is to discuss this with your closing agent or attorney and have them recommend an insurer that they work with often. You are not obligated to use the title company that is recommended to you; therefore, take the time to research which agency will best suit your needs.
Next, the title agency you have chosen will conduct a series of thorough searches to find all of the documents necessary to fully understand the state of the title. This will include all public records that are related to your property and will include past deeds, wills, trusts, divorces, and financial records.
The title agent then examines all of these records, interpreting the information to determine whether every transaction associated with the title has been properly managed, noticed, and filed. If anything appears to have been improperly recorded or otherwise mismanaged, they will work to determine the error(s). In the immediate, the concern is mainly focused on reporting about the state of the title. If any issues have been discovered, those will be corrected going forward.
Finally, the agent compiles a report including everything they have discovered regarding the title. They will make an expert analysis of the state of the title and share this with you, the potential buyer, to inform you of any problems.
Assuming there are no issues, you are given a title commitment (or binder) from the title insurer. This is a contract that outlines the terms of the insurance. You and the insurance company must agree on who and what will be insured, how much will be covered and how much it will cost you. Ask questions to be sure that you fully understand any exceptions to the terms of the agreement and any other requirements necessary for the policy.
Clearing The Problems
The next step consists of more duties for the title agent, though you will likely be involved too. In addition to working for you, the title agent also works with the sellers, lenders and any attorneys to correct any discrepancies in the chain of title.
There may be outstanding issues within the list of people who have owned the property that would make a buyer hesitant to purchase the property and the title. There may also be outstanding tax debts or liens against the property that must be paid before purchasing the property. Before purchase, it will have to be determined who is going to take responsibility for any of those debts.
Payment And Closing
Before your coverage goes into effect, you must pay the premium for your insurance policy. This is usually a percentage of the total purchase price of your home, and unlike other types of insurance where you pay monthly or annually for continued coverage, title insurance is typically a one-time fee.
This payment will occur as part of closing, in addition to all other payments and credits. The closing transaction may be completed anywhere, but it often takes place at the office of the attorney or title company.
The Policy Is Sent Out
Once completed, your title policy is issued. You and your property are now protected from any other problems that may exist that are undiscoverable. This may include an heir to the property who was previously unable to be located and now comes forward to claim what is rightfully theirs.
Trust The Professionals To Help You Select the Right Coverage
To ensure that you have a policy that meets your needs, be sure to rely on the experts. The professionals at Mathis Title Company would be happy to help you select the right coverage for your new home purchase. Contact Mathis Title Company to learn more or to schedule an appointment to get started.