Protecting Your Home with Title Insurance
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Purchasing a home is likely the biggest investment you will make in your lifetime. So before you commit to the transaction, you want to be certain that the "title" of the property is free of any other claims.
A title insurance company ensures that your new home is free of encumbrances and other legal obstacles.
For a modest, one-time title insurance premium, you will receive continuous title insurance protection equal to the purchase price of the property or its current market value.
The title company searches the title history of the property. The title insurance company can almost always identify any title problems that may arise and have these problems cleared-up prior to closing.
Because Real Estate Law is so complex, you need an expert to make sure that all previous transactions have been correct, so you don't end up with legal problems or a problem selling your property. Your owner's policy will describe the property and outline any recorded limitations on your ownership. It will also set forth the title company's responsibilities should any claim covered by the policy terms arise. Typically your title insurance will protect you in the following cases:
- Contested title — Someone, usually a previous owner or occupant, claims they still own the property or have not given up their claim. In this case, the title company will defend your title and will cost you nothing.
- Defective title — This is a general term for a legal problem with the title that cannot be corrected and includes "contested title" above. Other examples of title defects include problems with legal access to the property, easements that make the property less usable, unusable, or unsaleable. Any number of other complicated problems define "Defective title" or "Clouded Title." The title company will uncover these problems, or if they miss them, insure your loss up to the amount of the policy.
At Harbor View Lending* a DBA of Megastar Financial, we answer questions about this process every day. Call us: (207) 571-8034.