Buying a home is an important financial decision. During the purchasing process, many new home buyers have a flood of questions running through their minds like, “Am I choosing the right house?”, “ What other expenses should I be considering?”, “ What types of Insurance coverages do I need?” Owner’s title insurance is a step in the right direction for individuals looking to confidently buy their new homes. Mathis Title is here to provide you the answers to some of the most frequently asked questions regarding title insurance, as well as the questions you may be forgetting to ask. We’ll start by answering some basic questions:
Q1: What is a title?
A title is the legal term used to depict your right to own your property. Having clear title on a property not only establishes ownership but it also establishes your ability to use that property. However, there may be limitations that may accompany your title rights, such as utility easements or homeowner’s restrictions.
Q2: What is a title search?
Performing a title search is one of the first steps taken by Mathis Title through its contractors when buying a house. A title search uses public records containing evidence regarding the history of your home and uses this evidence to disclose any information concerning limitations on the ownership and usage of your property. If your title insurance professional detects a title issue, they will analyze it to determine what steps need to be taken to clear it and correct it without notifying you that the issue was there in the first place. An example of this would be releasing a previous paid off lien. After the title search is cleared, a title insurance commitment is then issued.
Q3: What is title insurance?
Title Insurance is a one-time premium, an indemnity insurance that protects your property investments and rights. When buying a home, a title insurance policy will give you assurance against property defects in the title and protect you from future losses. There are two types of title insurance policies: an owner’s policy(basic and enhanced), and a lender’s policy. Knowing the difference between the policies will help you understand how each one benefits you.
An owner’s policy protects the buyer of the property from invalid conveyances, prior liens, or if there are any other factors that impact the ownership of your property. Consult with Mathis Title to learn more about how this policy is handled in your area.
A lender’s policy protects the lender if a problem should arise with the title. This policy is typically mandated in order to receive a mortgage loan and does not protect the buyer’s equity on their purchased home. Consult with Mathis Title to learn more about how this policy is handled in your area.
Q4: Do I need owner’s title insurance?
Purchasing owner’s title insurance gives you protection against future legal claims on your property that may arise. These claims may result in expensive protracted negotiations, or messy litigation. By doing without owner’s title insurance, your stake in your home is vulnerable to title claims that can emerge years down the road. Owner’s title insurance is a single payment that will also cover your legal fees, and court costs to defend against potential claims.
Q5: What does owner’s title insurance cover?
Title defects may go undetected during a title search, and appear years after your purchase. Owner’s title insurance protects you against these undiscoverable defects in your title and other title issues including:
- Outstanding mortgages, and judgements
- Liens against the property due to a sellers unpaid taxes
- Unsettled legal action against the property
- Claim of ownership by an unknown heir of the previous owner
Unpredictable title claims include:
- Fraud in order to achieve unfair gain
- Ex. If a property owner’s identity is stolen, and their property is sold without their consent, or a second mortgage is taken out
- Forgery and false documentation
- Ex. Seller misrepresenting the identity of the actual seller of the property
- Clerical issues, inconsistent paperwork and historical records
- Ex. Discrepancy in the property or fence line that leads to confusion in ownership rights.
Q6: How long am I covered?
Coverage lasts the entirety of your ownership and for as long as your heirs retain possession of the property. From the moment you complete your transaction, and ownership is transferred, you can reside confidently knowing your property is insured.
Where Can I Learn More?
The Mathis Title Company offers their experience and professional knowledge to homebuyers, helping them comfortably navigate the processes of purchasing a house. Contact a Mathis Title agent to learn more about the importance of title insurance and protecting your property rights.