Common insurance policies, such as health insurance and auto insurance, are designed to protect insureds against future damages and costs. Whereas title insurance policies are designed to protect insureds against previous damages and costs associated with the title of a property. When acquiring title insurance, a thorough title search of the property is conducted by the title examiner and then reviewed by the settlement company to identify any outstanding liens, public record or deed errors. Although a thorough title search is performed, undiscovered issues and/or claims to the title could arise in the future. With title insurance, the homeowner’s investment is protected from any unforeseen or undiscovered title issues or legal claims.
Without title insurance, you may be responsible for legal fees related to the rightful ownership of your newly acquired property. If a claim is made on your title, the title company can either choose to defend the claim in court or pay the loss associated with the claim. If the title company decides to defend the claim, your title insurance policy will cover the costs obtained while the claim is being handled.
Losses and Damages from Liens
Contractors often place liens on properties before beginning remodeling or other construction work. If they are not paid for any reason, these contractors can invoke the lien as a way to receive payment for their work. However, many fail to remove the lien after successful completion and payment. Title insurance protects you from financial losses and damages resulting from the undisclosed lien. A title company will be able to discover these liens during their title search prior to issuing title insurance, allowing you to make an informed decision about how to proceed.
Losses and Damages from Title and Ownership Defects
Title companies conduct a thorough research process using public records prior to issuing title insurance. During this process, the company may discover that there are problems with the title and ownership documents, such as unpaid property taxes or the potential for another person to claim the property as their own. With title insurance, you will be protected from any attempts to remove you from the property or to force you to pay debts that are not yours.
Most lenders are less hesitant to enter a mortgage agreement with buyers who acquire title insurance. Title insurance protects lenders from problems against the title, including conflicting legal claims to the home. In the event of such a claim, mortgage lenders will not lose their investment in you as a client. This also allows lenders to foreclose on the property if you default on your loan for any reason. This policy is separate from owners’ title insurance, but both can be issued by the same title company.
Issues With Forgery, Heirs & More
In addition to these benefits, title insurance helps protect you from a range of other previous issues with the property that may not have been disclosed during the buying process. These can include forgery, undisclosed heirs, erroneous or inadequate legal descriptions, undisclosed easements, and improperly recorded deeds. Extended coverage can be available for incorrect surveys, off-record information that could impact your ownership, and pre-existing violations of subdivision or zoning laws. With title insurance, you will not be held responsible for issues that occurred with the property before you purchased it. Failure to secure the policy could leave you with expensive legal bills and the possibility of losing your home.
Speak With Mathis Title Company For More Information About Title Insurance
Robin Mathis is experienced in both the legal and real estate fields, allowing her to provide her clients with comprehensive title services that meet all legal requirements for smooth sales. Mathis personally oversees each closing herself to give clients individualized attention during their home buying process. In addition to title insurance, the company can assist with contract review and preparation, refinancing negotiations, settlements, and mechanics liens.