Title Insurance
Why Title Insurance?
Purchasing a home is often the single largest investment you’ll make. Owner’s and Lender’s Title Insurance policies protect buyers and lenders against hidden risks created by liens, encumbrances, and defects in the title.
When a piece of real estate property is purchased or sold or financed, a record of that transaction is generally filed in public archives. Other events that may affect the ownership or use of a property are also documented and filed. These records may include documents such as liens, levies, encumbrances, restrictive covenants, etc. The title company searches the public records to find (and cure, if possible) issues that may affect the purchaser’s ownership. However, even the most skilled title professionals may not find all title problems. Other title defects include matters that are more difficult to identify, such as issues resulting from filing errors, forgeries, undisclosed heirs, and other unforeseen problems.
Mortgage lenders and banks understand the need for Title Insurance. They are aware of the possibility of potential problems as well as how when title issues arise, they can be significant. As a result your lender will require you to purchase title insurance to protect their interest and will not close a transaction without it.
Do I need an Optional Owner’s Title Insurance Policy?
Yes! Although you are not required to*, we do recommend that you purchase Owners Title Insurance to protect your investment from financial loss in the event problems arise with covered rights to and/or ownership of your property.
When you “take title” to your property any number of issues that remain undisclosed, even after a detailed search of public records, can make a title defective. There may be hidden title defects that even the most careful title search will not reveal. In addition to protection from financial loss, Title Insurance pays the cost of defending against any covered claim. Unlike other types of insurance like homeowners and flood, Title Insurance is a one-time purchase that stays with you as long as you or your heirs own the home.
How will Owner’s Title Insurance protect me?
Some common examples of problems covered by an Owner’s Title Insurance Policy include:
• Improper execution of documents
• Mistakes in recording or indexing of legal documents
• Forgeries and fraud
• Undisclosed or missing heirs (including divorces of previous owners of the home)
• Unpaid taxes and assessments
• Unpaid judgments and liens
• Unreleased mortgages
• Mental incompetence of grantors on the deed
• Impersonation of the true owners of the land by fraudulent persons
Does the Lender’s Title Insurance Policy protect me?
No, there are two types of Title Insurance; the lender’s policy, and the owner’s policy. Your lender will require that you purchase a Lender’s Title Insurance Policy on their behalf. The lender’s policy only insures that the lender has a valid, enforceable lien on the property.
An Owner’s Title Insurance Policy is designed to protect you the owner from title defects that existed prior to the issue date of your policy. If a valid claim is filed, in addition to financial loss up to the face amount of the policy, your Owner’s Title Insurance Policy covers the full cost of any legal defense of your title.
How much does Title Insurance cost?
The one-time premium is directly related to the value of your home. At roughly one-half to one percent of the final sales price it is a relatively low, one-time only expense that will continue to provide coverage for as long as you or your heirs own the property.
* HB Title does require the purchase of an Owner’s title insurance policy in connection with cash transactions.