Often times, buyers will ask (since it is another expense); what is title insurance and why do I need it? As with any insurance, you pay for it (really hoping that you never need it) but you are annoyed that you have to pay. Come on, we all think that, but be glad you did. It is a protection you should want and may need in the future.
Unlike other types of insurance, your title insurance policy, for a one-time premium paid at closing, provides protection to you and your heirs for as long as you own your house. Also unlike other types of insurance, title insurance protects you from events that happened in the past: a forgery, forgotten heir, or other claims by people or entities who may truly (but unbeknownst to you) have a right to your property.
It’s a common misconception that a title search will uncover every possible defect in title. Title searches only discover events and documents of public record, so anything done illegally or without proper documentation may not be known until sometime in the future.
If you are getting a loan (which the majority of buyers do), your lender insists on having their own policy separate from the owner’s policy. If it’s important for their partial investment in the property, it is even more important for the homeowner to be protected for the full value of the home.
When I represent buyers I fill out the contract to buy and sell asking the Seller to cover the cost of the owner’s title policy (including extended coverage). Rates vary depending on the price of the home and the last time a title policy was issued on that home (for a refinance or purchase). Buyers are typically responsible for covering the policy required by the lender. Check out Land Title’s article for more detailed information. Land Title: What is title insurance and why do I need it?
Your home is a huge investment. This is just one more way to protect your property.