Chris and Lori are buying their first home. Their realtor talked with them about buying title insurance, but Chris and Lori are on the fence about the purchase. It’s a one-time expense that will prevent Chris and Lori from losing their new home if a problem with the title arises.
What is Title Insurance?
Title insurance protects the insured from past occurrences. Common types of title insurance claims include:
- Errors in the public records
- Undiscovered liens
- Omitted heirs
When you purchase title insurance, an extensive search of the property’s title is performed. This search minimizes potential liability for the owners by discovering foreseeable title issues. Once the property owner takes possession of the title, title insurance defends against litigation that challenges the validity and legality of the new owners.
Here’s a local example that happened in the Memphis area. An elderly woman passed away leaving her assets, including a home, to her daughters. The two daughters sold their mother’s house and split the proceeds. The new homeowners walked away happy with their purchase. Until two years later when a third sister laid claim to the property.
In this instance, title insurance would have covered what was owed to the third sister thus protecting the new homeowners.
Types of Title Insurance
There are two types of title insurance. Mortgagors purchase title insurance to secure security interest in the estate. Property owners purchase title insurance to protect their investment.
The average title insurance policy costs property owners a one-time payment of $544 while mortgagors pay around $835 for their coverage.
Title insurance may seem like an unnecessary expense to some but the protection and peace of mind it offers is invaluable. A one-time cost at closing allows new property owners to enjoy their investment without worry.
Your closing attorney plays a vital role in ensuring that you, the new property owner, are fully protected with your investment. The Stiles Law Firm is diligent in protecting our clients and giving them the best experience possible during the purchase of their new home or property. Book your free consultation to learn more.