Owner’s title insurance is designed to protect a homeowner (following a property purchase) from lawsuits by a third party that are tied to claims from before the home was bought. These claims typically arise as a result of a previous owner’s failure to pay taxes or from contractors who assert that they did not receive payment for remodeling or repair work completed on the property (mechanics liens). It is important to note that a title insurance policy is generally issued after closing and is thus different from a title commitment, which is made before closing.
The Benefits Of Owner’s Title Insurance
A title (e.g. a deed) serves as a form of proof that you legally own a property. An owner’s title insurance policy can be an extremely beneficial way of protecting yourself if you have any reason to believe that certain claims against your home may arise. Here are three notable advantages of owner’s title insurance.
Protection On Your Property For You & Your Heirs
One major benefit of owner’s title insurance is that most such policies often last for as long as you (or any heirs you may have) retain an interest in the property. Many policies will also generally cover the home’s full purchase price. It is important that you clearly name all heirs to your property in your last will and testament. This will likely make any potential legal disputes with previously undisclosed heirs who claim to own your home after you die significantly less difficult to settle. Such an ownership claim is an example of a title defect, which is any issue that may cause a title to be deemed invalid.
Policyholders Are Protected Against Costs & Fees From Attorneys
In addition to protecting you and your heirs, an owner’s title insurance policy can provide protection against attorneys’ fees and any other expenses tied to your defense in a lawsuit that follows a claim against your property. These costs can amount to several tens of thousands of dollars, as cases such as that of Stewart Title Guaranty Co v. Closure Title & Settlement Co. LLC revealed. (Stewart paid over $72,000 in attorneys’ fees in that $120,000 settlement). If unexpected issues arise in your dispute and the case becomes prolonged, your legal fees may also likely increase.
Covered From Certain Risks
Owner’s title insurance can also shield you against certain risks that do not exceed the limit listed on your policy. This includes defects in your home title arising from:
- Forgery or fraud
- Unmarketable title
- Encumbrances, easements, or rights of way, which limit use of the property
- Unpaid mortgages and other liens
- A lack of access to and from the property
- Unpaid property taxes or assessments due, and
- Other potential risks
You should also remember that if you decide to sell your home, owner’s title insurance can shield you from financial loss in the event the sale is unsuccessful because of one of the covered defects listed above. Certain extended owner’s policies may protect you against additional liabilities, such as forgeries or encroachments, building permit violations, structural damages, or living trusts.
Unlike other types of insurance, title insurance is not paid on a regular (e.g. annual or monthly) basis. You only need to pay for it once. Depending on your state, your title insurance company may provide you with an itemized list of fees upon closing. Although this balance may be different from what is listed on your closing disclosure or mortgage loan estimate, this does not necessarily entail that you are now expected to pay more. Be sure to alert your title company immediately after someone files a lien or other claim against your property.
Seek Owner’s Title Insurance With Mathis Title
Reach out to the professionals at Mathis Title Company in Fairfax, Virginia for more information on owner’s title insurance and its benefits. Our team consists of Robin Mathis, a real estate attorney with more than 30 years of experience, and Ann Andreatos, a title agent who has a keen ability to track down lien releases and missing documents.
At Mathis Title, we know that the process of acquiring title insurance can be a stressful one, so we are dedicated to providing you with personalized assistance at every step of the way through closing. We will always ensure that your title transfer is clean and then contact one of our trusted underwriting companies to issue an insurance policy. This policy will pay for an attorney should the validity of your title be challenged, and it can also provide compensation for your equity if your case is lost. Call Mathis Title Company today at (703) 214-4020 or contact us online to learn more about our services.