Why You Should Get Title Insurance

Why should you get title insurance for your property?  Did you know that it is possible for someone else to claim ownership of your property after closing?  Unfortunately, without title insurance, you could owe a substantial amount of money or even lose the property and be left to chase down compensation from the seller.  A title examination prior to closing and title insurance purchased at closing are designed to prevent this kind of misfortune from happening to you.  

If you do not have a title examination done prior to closing, you are taking a major and unnecessary risk.  Legal problems can arise when the rights of a previous owner are not known or taken into consideration.  There also may be liens or other claims against the property of which you are not aware.  

If you are getting a mortgage to buy the property, your lender will require you to have title insurance at least in the amount of their loan to you.  Most also require you to have title insurance for your equity at closing.  This will not be open to debate or negotiation.

But what exactly is title insurance?  Title insurance is a unique kind of insurance policy.  This type of insurance offers you protection against any losses that may occur because of a deficiency in title.  For instance, let's say that you just purchased a property, and then later you find that someone else also claims ownership over the same piece of land.

If you have a title insurance policy, the title insurance can pay your losses and legal fees in case that person decides to sue for the property.  A title insurance policy also can help protect you in case your property had valid mortgages or liens that were not disclosed or known prior to closing.  

What about a title examination?  How does a title examination affect title insurance?  All property titles are subject to close examination before closing.  The title company conducting the test will look into the public records for liens, easements, deeds, and other claims against the properties.  If there are any defects or problems, these will be reported and must be corrected prior to or at closing.  

Why should you get title insurance even if you're not getting a mortgage?  If the title appears to be clean, then home title property insurance may not seem like such a necessity.  However, this is not always true.

There can be errors during the examination period or new liens filed between the examination date and closing date.  Having a title insurance policy can protect you from any potential losses.  Clearly, you may be more drawn to getting a title insurance policy if you think that your home title may eventually end up becoming contested or entangled in a legal skirmish.

In summary, title insurance is a necessary expense to protect your real estate investment.  Don't be penny wise and pound foolish in this area -- get that policy for every property you buy.