If you have just recently purchased your first home, you may likely be feeling a mixture of excitement and trepidation. You may be wondering what types of insurance are the most necessary. Title insurance should definitely be a priority purchase. Before analyzing the importance of this form of protection, let’s clearly define what it is.
What Is Title Insurance?
Title insurance is a type of indemnity insurance that serves as protection from financial loss tied to the ownership of a property. This type of insurance typically includes two policies: a lender’s policy and an owner’s policy, the latter of which is often optional. A “title” is a document that certifies you as the legal owner of your property. According to a February 2019 report by Statista, lender’s title insurance for a $600,000 mortgage can cost anywhere between $925 and $1772, depending on what bank you choose to assist you.
Reasons You Need Title Insurance
There are many reasons why title insurance is beneficial both in the short run and in the long run. However, here are three major reasons you need it.
Protects From Ownership Claims
In certain cases, another individual can unexpectedly claim he (or she) owns your newly acquired home for any reason (e.g. the person is a previously undisclosed heir to the property). A title and the corresponding insurance can help you prove that you are the true owner of the property. In a situation such as this, it’s important for you to verify that the person claiming to own your property also has evidence of ownership so that you are not swindled by a fraud.
Common examples of title defects include liens, encumbrances, and outstanding taxes. Without title insurance, you can potentially end up being responsible for any taxes or other payments the previous owner of your property neglected to pay. Any encumbrances or other issues with a title must always be resolved before you sell your property (if you decide to do this). A title can also be defective due to improper acknowledgment resulting from the lack of authority of a notary.
Errors In Recording Files
Issues related to the process of certifying you as the legal owner of your property may also, unfortunately, arise as a result of blunders that are not your fault. Even seemingly small, clerical errors in legal documents or public records (e.g. indexing, omissions due to similar-sounding names) can result in you entering a dispute over your right to ownership. The failure to keep original instruments can also represent an issue.
Other title issues that can arise include inadequate descriptions of your property, incorrect interpretations of wills, and the execution of a deed by an individual who is a minor or incapable of making executive decisions regarding property ownership for any other reason (e.g. physical or mental illness).
In any case, the important thing to remember is that you should never be taken advantage of by anyone for any reason. Therefore, you should always verify that every document is accurate and acquire title insurance so as to avoid paying additional taxes and fees or suffering any other kind of unnecessary financial loss. If you are ever uncertain about exactly what your title insurance policy covers, don’t hesitate to speak to an experienced agent. Regarding the total cost of title insurance, you may sometimes be able to negotiate this with the seller.
Contact The Title Insurance Experts For More Info On Why You Need Title Insurance
Speak to the professionals at Mathis Title Company in Fairfax, Virginia for more information on the importance of title insurance. We are led by Robin Mathis, an attorney with more than 30 years of experience in real estate settlement services. Robin has performed thousands of closings throughout the years, both small commercial and residential, and is highly familiar with the buyer and seller sides of real estate transactions.
At Mathis Title, we know that the process of seeking, acquiring, and fully understanding property-related insurance can be overwhelming. Therefore, we are dedicated to guiding you through every step of this process. We know how to verify that a title is clean and will play a large role in ensuring that the title transfer process is conducted properly. Call Mathis Title Company today at (703) 214-4020 or contact us online to learn more about our services or about how title insurance works.