First of all let's go over what the title is. The title is a document filed at the courthouse that verifies your legal right to own your new home. Whenever you purchase your home, a title search is performed to make sure there are no errors or legal problems that would effect your ownership rights. Unfortunately, sometimes problems will show up days, weeks, months or even years later. That is when problems can occur.
There are two different types of title insurance. The first type covers your lender and is required. The second covers you as a buyer.
Lender's Policy:
- Mandatory for buyers to purchase (if you are financing the home of course)
- Protects the mortgage lender
- Covers title defects, easment problems, judgements or liens
- Remains in effect until the mortgage is paid off
Owner's Policy:
- Optional for buyers to purchase - but a small investment for peace of mind
- Protects you, the buyer, against title defects, easments, judgements or liens
- Pays for court costs and fees associated with claims, plus any other losses
- Covers you and your heirs forever - even after you sell the property
Potential Threats to Your Title:
- Sudden appearance of unknown heirs
- Discovery of forgery, fraud or impersonation
- Evidence of altered deeds
- Discovery of unfiled or defective legal documents
- Liens for unpaid taxes or assessments
Unfortunately, there are far too many buyers that underestimate the importance of this coverage and find out too late how nice it would have been to have it.
As an attorney I have seen a number of instances in several states where historical records dating back more than 150 years were burned in fires, flooded, or some such. Then, when the current owner tries to sell, some person or entity comes forward claiming they have rights to the property, based on antique claims. Sometimes this is true. But for certain, it is why the lender wants the insurance, and I would argue for buyers, that if the lender thinks it is worthwhile, you should too.
Just my two cents.
Brett- Great way of covering the basics in a way that our clients will understand and appreciate.
Best wishes,
Scott Cowan
Rainier Real Estate
www.scottcowan.com
Brett.... long time no see nor hear. It's funny, I was just thinking about writing something on this topic 2 days ago. You did a good job here.
Ronda - "Small investment for peace of mind"
Paul - That's a good way to put it.
Scott - No problem.
Jeff - What's happening man? I guess you watched that game last night? Wasn't the outcome I was looking for, but was exciting nonetheless.
Brett... just sent you an e-mail.... That game was closer than it should have been. Looking forward to basketball season. The Cards should be very good this year. Hope it's not a let down season.