Title Insurance, Real Estate and You!

Title Insurance, Real Estate and You!

It’s time to revisit the why buyers need to purchase title insurance which covers owners in case title issues appear when you decide to sell your property.

There’s a tagline in commercials for a well known credit card…”Don’t leave home without it!” and a good tagline for today’s home buyers in greater Cincinnati concerned about spending money on title insurance would be ….”Don’t close on a home/condo without it!”.

Title Insurance

Title Insurance is a “policy” of protection against any problems that may affect the title on your property.

The “title” is your legal claim of ownership to the property and any hidden or undiscovered problems with the title can cause you problems down the road. After you purchase a property and are ready to close the lender and/or title company provide you with closing forms listing all the charges and credits due at closing. In the middle of the 2nd page (usually lines 1104-1106 ) a charge for title insurance will appear- but this insurance only covers the lender in case of undetected title problems. As the buyer you’ll be offered the opportunity to purchase an “owner’s policy” either just before or at the closing- make sure you secure a policy to protect you against undetected “title defects”.

Many buyers and some real estate agents question the need to buy title insurance. To understand the reasoning, buyers need to understand that in order to insure that the sellers actually have full and legal title, the closing company will do a thorough check of courthouse records to research the ownership history. Unfortunately researching the “official records” doesn’t guarantee recording accuracy. Sometimes the person performing the search can miss something or maybe the critical information was never properly recorded.

How can past title problems affect you going forward? Well consider some of the problems the owner’s title policy covers:

  • unrecorded easements
  • lien or encumbrance filed against a previous owner
  • forged wills
  • expired power of attorney
  • fraud
  • undisclosed spouses or heirs

In short-lots of things can impact your ability to successfully transfer the title when you decide to sell.  Many title companies take responsibility to clear minor title issues prior to closing.  But if the problem is complicated it’s up to the owner to correct the problems and it can be very expensive for you to hire an attorney to correct the problems and the owner’s title insurance policy owner protects you against the costs of fixing undiscovered title defects and problems which happened before you purchased the property. It’s a one time charge for an insurance policy protecting your legal claim to your home or condo.  In short- don’t leave the closing table without it and if you have questions about how it works -check with your attorney or with attorneys representing the title company.  Remember, the lender is making you pay for a policy to protect the financial institution from future problems- they know that it is time consuming and expensive to fix title issues.

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Related Information: All About Title Insurance