Understanding Owners Title Insurance Policy

Buying a house is one of the biggest investments most people make in their lifetime. It’s an exciting time and can be overwhelming as there are many things to consider. One of the most important things to consider when buying a house is getting an owners title insurance policy. This will provide protection against potential legal and financial issues related to the property’s title. In this article, we will explore what an owners title insurance policy is, how it works, and why it is important.

What is an Owners Title Insurance Policy?

An owners title insurance policy is an insurance policy that protects the home buyer from financial loss caused by any defects in the property’s title. The policy will cover the cost of any legal fees, settlements or judgments that may arise if there is a dispute over the ownership of the property you have just purchased. This can include claims against your title such as unpaid liens, unpaid taxes and judgments, undisclosed heirs, and fraud.

The policy is paid for by the buyer and is typically issued at the time of closing. The premium for the policy is based on the purchase price of the property and is a one-time fee.

What does an Owners Title Insurance Policy Protect you Against?

An owners title insurance policy can provide protection against a wide range of potential issues related to a property’s title. Some of the most common issues that are covered include:

Issue
Description
Forgery and Fraud
If someone forges a document or commits fraud related to the property’s title, an owners title insurance policy will protect you against any financial loss.
Liens and Judgments
An owners title insurance policy will protect you against any financial losses related to liens or judgments that were not found during the title search.
Undisclosed Heirs
An owners title insurance policy will protect you against any financial loss that may arise if an undisclosed heir comes forward with a claim on the property’s title.
Ownership Issues
An owners title insurance policy will protect you against any financial loss that may arise if there is a dispute over the ownership of the property.

How does an Owners Title Insurance Policy Work?

When you purchase a home, a title company will perform a title search to ensure that the seller has the legal right to sell the property, and that there are no outstanding liens or judgments against the property. If any issues are found, the title company will work to resolve them prior to the sale.

However, there may still be issues that arise after the sale. For example, there may be an undisclosed heir who comes forward with a claim on the property’s title. This is where an owners title insurance policy comes in. If a claim is made against your title, the insurance company will work to resolve the issue. If the claim is found to be legitimate, the insurance company will cover the cost of any legal fees, settlements, or judgments that may arise.

What is the Difference Between an Owners Title Insurance Policy and a Homeowner’s Insurance Policy?

An owners title insurance policy and a homeowner’s insurance policy are two different things. A homeowner’s insurance policy is designed to protect you against damage to the physical structure of your home, as well as theft of personal property. An owners title insurance policy, on the other hand, is designed to protect you against financial loss related to any issues with the property’s title.

Why is an Owners Title Insurance Policy Important?

Buying a home is a major investment, and it’s important to protect that investment. An owners title insurance policy can provide you with peace of mind and financial protection against any issues that may arise with the property’s title.

Without an owners title insurance policy, you may be responsible for any legal fees, settlements or judgments that may arise if there is a dispute over the title of the property you have just purchased. This can be a costly and time-consuming process, and can result in the loss of your home.

FAQ

What is the difference between a lender’s title insurance policy and an owners title insurance policy?

A lender’s title insurance policy is a policy that protects the lender in the event of any issues with the property’s title. An owners title insurance policy, on the other hand, protects the buyer.

Is an owners title insurance policy required?

An owners title insurance policy is not required, but it is highly recommended. While a title search can help identify any potential issues with a property’s title prior to purchase, there may still be issues that arise after the sale.

How much does an owners title insurance policy cost?

The cost of an owners title insurance policy can vary depending on the purchase price of the property. The premium for the policy is typically a one-time fee, paid at the time of closing.

How long does an owners title insurance policy last?

An owners title insurance policy lasts for as long as you own the property.

Can I purchase an owners title insurance policy after closing?

You can purchase an owners title insurance policy after closing, but the premium may be higher than if you had purchased it at the time of closing.

Conclusion

An owners title insurance policy is an essential part of the home buying process. It can provide protection against potential legal and financial issues related to the property’s title. By understanding what an owners title insurance policy is, how it works, and why it’s important, you can make an informed decision about whether or not to purchase this important insurance policy.