The Importance of Owner’s Title Insurance

Buying a home is one of the biggest investments most people make in their lifetimes. Homeowners invest significant amounts of time, money and energy into buying and maintaining their properties. However, even with all of the care and attention that goes into the home buying process, unforeseen problems can arise. One of the best ways to ensure that you are protected from these unforeseen problems is to purchase owner’s title insurance.

What is Owner’s Title Insurance?

Owner’s title insurance is an insurance policy that protects homebuyers from potential defects in a property’s title that may have occurred prior to their purchase. These defects can include ownership disputes, fraud, unpaid taxes or liens, and other issues that can prevent the buyer from fully taking possession of the property.

Owner’s title insurance policies cover the cost of any legal fees, court costs, or settlements that may arise from defending your ownership of the property. This type of policy will also pay for any losses if the seller was not legally allowed to sell the property, or if there are any outstanding liens or encumbrances on the property that were not disclosed during the sale.

What is a Property Title?

A property title is a legal document that shows who owns a piece of real estate. It contains information about previous owners, the property’s boundaries, and any liens or encumbrances on the property. Before purchasing a property, it is important to conduct a title search to make sure there are no issues with a property’s title.

What are the Risks of Not Having Owner’s Title Insurance?

There are many risks associated with not having owner’s title insurance. For example, if a previous owner had unpaid property taxes, the county or state could place a lien on the property, and the new owner could be forced to pay the overdue taxes. The cost of settling a lawsuit or dispute over the ownership of the property can also be significant, and without owner’s title insurance, the full cost of these expenses will be borne by the homeowner.

How Much Does Owner’s Title Insurance Cost?

The cost of owner’s title insurance varies depending on the location of the property and the policy’s coverage amount. In general, the cost is based on the purchase price of the property. For instance, if you purchase a home for $200,000, your owner’s title insurance policy could cost between $1,500 and $2,000.

What Does Owner’s Title Insurance Cover?

Owner’s title insurance policies can provide varying levels of coverage. In general, these policies protect homebuyers against issues such as:

Note that coverage amounts and deductibles can vary between policies. It is important to read the policy carefully to understand exactly what is covered.

How is Owner’s Title Insurance Purchased?

Owner’s title insurance is typically purchased at the same time as the property’s closing. Homebuyers can choose to purchase an owner’s title insurance policy from any licensed title insurance company. Your real estate agent or attorney can recommend a reputable title insurance company in your area.

How Do I File a Claim?

If you believe that you have a title claim, you should contact your title insurance company immediately. The company will investigate the claim, and if necessary, provide legal representation to protect your interests. It is important to note that title insurance claims are subject to certain limitations and exclusions. You should read your policy carefully and discuss any questions or concerns with your title insurance company.

Conclusion

Owner’s title insurance is an important investment for homeowners who want to protect their investment. Whether you are a first-time homebuyer or a seasoned real estate investor, it is important to understand the risks associated with not having this type of coverage. By purchasing an owner’s title insurance policy, you can have peace of mind knowing that you are protected from unforeseen title issues that can arise after the purchase of your home.

Frequently Asked Questions

What is the difference between owner’s title insurance and lender’s title insurance?

Lender’s title insurance is an insurance policy that protects the lender’s investment in the property. This type of policy is typically required by the lender and is paid for by the borrower. Owner’s title insurance, on the other hand, is an optional policy that protects the buyer’s investment in the property.

Do I have to purchase owner’s title insurance?

No, owner’s title insurance is not required by law. However, it is highly recommended for all homebuyers. Without owner’s title insurance, you could be responsible for paying legal fees and other costs associated with defending your right to your property.

How long does owner’s title insurance last?

Owner’s title insurance lasts as long as you own the property. There is no expiration date on an owner’s title insurance policy.

What happens if a title claim is made after I sell my home?

If a title claim is made after you sell your home, your title insurance policy will still provide coverage for any issues that arose during the time you owned the property.

What is the difference between a title search and owner’s title insurance?

A title search is a process that examines public records to determine the property’s ownership history and any liens or encumbrances on the property. Owner’s title insurance, on the other hand, provides protection in the event that a defect in the title is discovered after the sale has been completed.