Even the most skilled searchers may not be able to find problems with title. It is always possible that there are issues with the filing of documents with the county, documents not being filed, undisclosed heirs to an estate, or even forgeries of deeds and other legal documents. Title insurance helps to protect your real estate investment due to these minimal risks.
If you are planning on financing your property through a lender, the lender will require that you purchase a lenders’ title insurance policy. This policy will ensure that if there is a defect in title uncovered at a later date, then the lender will have that insurance for the loan amount for the life of the loan under circumstances stated in the title insurance policy. The insurance is subject to the policy provisions, which include the covered risks, exclusions from coverage, the conditions and the exceptions to title.
As an owner, you have the option of purchasing an owner’s title insurance policy. If there is a defect in title and you only have a lender’s policy, the bank will be able to get their money back, but you do not. An owner’s title insurance policy will provide insurance directly to you as the property owner, and will describe the property insured. The insurance is subject to the policy provisions, which include the covered risks, exclusions from coverage, the conditions and the exceptions to title.
If you are not financing a property, you still have the choice to buy an owner’s title insurance policy to protect you from any defects in title in the future.
Both the lender’s and owner’s policies are paid for with a one time premium at the time of closing. The amount paid will be based on the total value of the property as well as the amount of the loan. This is a one time payment. There are no ongoing payments. Buying a home or piece of property is usually the biggest financial investment you will ever make. Title insurance gives you the peace of mind to know that your title to your property is insured.