Title Insurance is a type of insurance policy that helps protect an owner’s or lender’s financial interest in a property against loss due to defects in the title. Title insurance is typically required when purchasing real estate, as it provides protection against potential losses resulting from title-related issues that may have occurred prior to the purchase. Title insurance is often a one-time fee paid at closing, and the coverage is typically in effect for as long as the insured person or entity owns the property.
What Does Title Insurance Cover?
Title insurance provides protection from a variety of title-related risks, such as:
- Errors or omissions in the public records
- Fraudulent deeds
- Forged deeds, mortgages, or other liens
- Incorrect deed descriptions
- Unknown liens or encumbrances
- Easements or rights of way
- Liens for unpaid taxes or special assessments
Types of Title Insurance
There are two types of title insurance policies: owner’s policies and lender’s policies. An owner’s policy is typically required when purchasing a home, and it protects the owner from title-related risks up to the amount of the purchase price. A lender’s policy is typically required by a lender when providing a mortgage loan and it protects the lender from title-related risks up to the amount of the loan.
Why Is Title Insurance Necessary?
Title insurance is an important part of the home buying process, as it helps protect a buyer from losses due to title-related issues. Without title insurance, a buyer may be held responsible for title-related problems that may have occurred prior to their purchase. These problems can include: liens, encumbrances, or other issues that could reduce the value of the property or affect the buyer’s ability to sell or refinance the property.
How Much Does Title Insurance Cost?
The cost of title insurance varies depending on the state, the property’s location, and the purchase price. Generally, title insurance is a one-time fee that is paid at closing, and the cost is typically based on a percentage of the purchase price. For example, in some states the cost of title insurance is typically 0.5% to 1% of the purchase price.
Title Insurance Companies
Title insurance is typically provided by title insurance companies. These companies are responsible for examining the public records to ensure that the title is clear of any liens or encumbrances. They also provide title insurance policies to the buyer and lender, and they are responsible for settling any title-related claims that may arise.