When you buy a home, you’re also buying its title – the legal right to the property. However, titles can be complicated. For example, there could be unpaid taxes, undiscovered liens or even unknown heirs who claim to own the home.
Title insurance helps safeguard you from these potential issues, and it’s an important step you don’t want to skip when purchasing a home.
Types of title insurance
There are two types of title insurance: lender’s title insurance and owner’s title insurance. Lender’s title insurance is required by mortgage lenders if you’re financing your home. However, it only protects their financial interest in the property, but it does not cover you, the homebuyer.
Owner’s title insurance is optional but totally worth it as it protects your investment from unexpected claims. You never know what could happen in the future.
How owner’s title insurance works
Once you agree to buy a home, the title company will conduct a thorough search to check the property’s history and anything that could affect your ownership rights, such as hidden claims or unpaid debts. If a problem is discovered, the title company will work to resolve it before you close the deal.
Title insurance kicks in once you complete the purchase. This is because there may be issues missed during the title search, like old liens or undiscovered claims. Should any such title-related problems arise after purchasing the property, your policy will cover the ensuing financial or legal costs of resolving them.
Without title insurance, you could be left holding the bag for expensive legal fees or lose ownership of your new home if something goes wrong.
Protect your investment
Seeking legal assistance can help you stay one step ahead in the home-buying process. While title insurance may come in handy after buying the property, you can avoid complications from the start and help ensure your investment is secure with the proper guidance.