|
Why Do You Need Title
Insurance?
Title Insurance. It's
a term we hear and see frequently -- we see reference to it in the Sunday
real estate section, in advertisements and in conversations with real estate
brokers. If you've purchased a home before, you're probably familiar with
the benefits and procedures of title insurance. But if this is your first
home, you may wonder, "Why do I need another insurance policy? It's just one
more bill to pay."
The answer is simple: The purchase of a home is most likely one of the most
expensive and important purchases you will ever make. You, and your mortgage
lender, want to make sure that the property is indeed yours -- lock, stock
and barrel -- and that no individual or government entity has any right,
lien, claim to your property.
Title insurance companies are in business to make sure your rights and
interests to the property are clear, that transfer of title takes place
efficiently and correctly and that your interests as a homebuyer are
protected to the maximum degree.
Title insurance companies provide services to buyers, sellers, real estate
developers, builders, mortgage lenders and others who have an interest in a
real estate transfer. Title companies routinely issue two types of policies
-- "owner's," which cover you, the homebuyer; and "lender's," which covers
the bank, savings and loan or other lending institution over the life of the
loan. Both are issued at the time of purchase for a modest, one-time
premium.
Before issuing a policy, however, the title company performs an extensive
search of relevant public records to determine if anyone other than you has
an interest in the property. The search may be performed by title company
personnel using either public records or more likely, information gathered,
reorganized and indexed in the company's title "plant."
With such a thorough examination of records, any title problems usually can
be found and cleared up prior to your purchase of the property. Once a title
policy is issued, if for some reason any claim which is covered under your
title policy is ever filed against your property, the title company will pay
the legal fee involved in defense of your rights, as well as any covered
loss arising from a valid claim. That protection, which is in effect as long
as you or your heirs own the property, is yours for a one-time premium paid
at the time of purchase.
The fact that title companies work to eliminate risks before they develop
makes the title insurance decidedly different from other types of insurance
you may have purchased. Most forms of insurance assume risks by providing
financial protection through a pooling of risks for losses arising from an
unforeseen event, say a fire, theft or accident. The purpose of title
insurance, on the other hand, is to eliminate risks and prevent losses
caused by defects in title that happened in the past. Risks are examined and
mitigated before property changes hands.
This risk elimination has benefits to both you, the homebuyer, and the title
company: it minimizes the chances adverse claims might be raised, and by so
doing reduces the number of claims that have to be defended or satisfied.
This keeps costs down for the title company and your title premiums low.
Buying a home is a big step emotionally and financially. With title
insurance you are assured that any valid claim against your property will be
borne by the title company, and that the odds of a claim being filed are
slim indeed.
Isn't sleeping well at night, knowing your home is yours, reason enough for
title insurance?
Article by CLTA
|
