Who Really Owns That Home? Understanding Title Insurance
Posted on: 12 February 2018
Congratulations; you've finally found the home of your dreams, your financing is in place and you are ready to close in a few weeks. Part of the closing process means that you will be presented with a list of all expected charges to be paid. This allows you to know well ahead of time how much cash you'll need to bring to the table, and in fact, the financing company will often require proof that you have that much cash on hand. One important charge on the closing list is worth well worth the price, and that is the title insurance policy. Read on to learn more about this special type of insurance and why it's so important.
Why do I need title insurance?
The chain of ownership can be extremely long and complicated when it comes to real estate titles, even going back hundreds of years in some cases. With the filling out and filing of each title and each owner comes to a potential landmine of human error and typos. When you are dealing with the relatively precise measurement required for the property, there is plenty of room for errors. This insurance serves as protection against those errors.
The title search
Part of the fee for title insurance involves the services of a specialist who looks back in history at each and every time your property has changed hands. These specialists look for errors and inconsistencies, and all must be resolved for them to offer insurance. A clear title is then available to you for your home, and you are then insured against any future problems with the title. In almost all cases, larger plots of land were divided and subdivided, but the trail is researched as far back as possible. Fortunately, the days of scrutinizing dusty plat books are over, and most searches are done using computer data source.
For example, if someone steps forward claiming the home is legally still their home, the insurance goes toward proving that claim wrong. As you might imagine, this insurance is not just important because the lender requires it, but because of its value to you in having a home with a clear title. It will also become important when it's time to sell the home.
It should be noted that the purchase of title insurance is a one-time deal; no need to pay ever again on that particular parcel of land. It is most often paid by the buyer, but it is not unheard of for the buyer and seller to split the cost. If you have more questions about title insurance or any part of your closing, speak to your real estate agent.
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