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Title Insurance = Peace of Mind
Title Insurance is one of the two insurances that a buyer purchases to protect the huge investment he or she makes when buying a house:
- Fire, or homeowners, insurance covers the risk of loss should the house itself be damaged or destroyed,
- Title insurance covers the risk of the possibility that another person has a better right, lien or claim to the property than has the buyer.
Title insurance companies provide an up-to-date search of the title to the property. When they determine that a buyer’s rights and interests to the property are clear based on recorded information, they will issue a title insurance policy to cover any un-recorded issues that might undermine the buyer’s rights and interests. If the title search uncovers problems with the title, the company will have these problems cleared prior to closing.
Title insurance is a one-time cost, payable at closing. It covers not only the buyer for the length of his ownership of the property but also the bank/mortgage lender.
The title insurance policy describes the property and identifies any recorded limitations to ownership. It also sets forth the title insurance company's responsibilities should a claim arise that is covered by the terms of the policy. Typically title insurance protects from loss:
- the title insurance company will defend the title at no expense to the buyer when someone contests the title in legal action,
- or, the title insurance company will protect the buyer from financial loss up to the amount of the policy if there is a title defect that cannot be eliminated.
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