Protecting Your Home with Title Insurance
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The biggest investment you will make in your lifetime will likely be purchasing a home. Before you close, you will want to know that no other individual or entity has a claim or lien to the property.
A title insurance company ensures that your new home is free of encumbrances and other legal obstacles.
For a modest, one-time title insurance premium, you will receive continuous title insurance protection equal to the purchase price of the property or its current market value.
The title insurance company searches the property's title history. The title insurance company can usually identify any title problems that may arise and clear up these problems prior to closing.
Real Estate law is extraordinarily complicated. Title companies make sure that all the T's are crossed and all the I's are dotted so you don't end up with a clouded title and legal problems. Your title insurance owner's policy will describe the property and outline the limitations on your ownership. It will also cover what the title insurance company is responsible for. Title insurance usually covers:
- Contested title — This usually happens when someone who owned or even lived in the home before you claims to still hold an interest. If this happens, the title company will defend your title and will cost you nothing.
- Defective title — "Defective title" covers any number of problems with the title to your home. It can even include a "contested title". Defects are rare, but they can be very difficult, making the property inaccessible, unbuildable, or unsaleable. Any number of other complicated problems define "Defective title" or "Clouded Title." The title company will uncover these title problems, or if they miss them, insure your loss up to the amount of the policy.