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Why Do I Need Title Insurance?

12/14/2012

What is Title Insurance?
It’s protection against defects which affect the title to your home or business. When you buy property, you are conveyed title by the prior owner to evidence your full legal ownership but occasionally a hidden defect in the title or a mistake in a prior deed, will, or mortgage may give someone else a legal claim against your property.
 
Why is Title Insurance important?
Because it protects the investment you’ve made in your home or business. If a claim is made against your property, title insurance can save you time and money.
 
Who is covered by Title Insurance?
The Lender – When you borrow money to buy property, you are typically required to buy title insurance to cover the outstanding balance on the mortgage for the lender. But the lender’s title policy does not protect you.
 
The Buyer – It’s a good idea to get your own title insurance policy for protection in case there’s a claim against your home. Then your investment is safe too.
 
What risks are covered?
The policy is underwritten to include or exclude specific risks, depending on the circumstances. But generally the title policy covers 4 “hidden risks”.
  1. Errors in public records
  2. Judgments, liens and mortgages
  3. Claims to ownership
  4. Invalid deeds

Many of these problems might not be discovered in a routine search of the public records.

 
Note that certain risks may not be covered by your title insurance policy. The terms of your policy may include:
  1. Standard Exclusions – appear as part of the printed form. These include government regulation and limitations land use.
  2. Exceptions may also be specially written into your policy. For example easements, rights of way and other encumbrances and restrictive covenants.
How much does Title Insurance cost?
You pay a one-time premium for coverage that lasts as long as you own your property, or as long as you may be liable for any title warranties you make. So title insurance provides long-term coverage against many serious title defects. You get a lot of protection for a low one-time charge.
 
For more information on title insurance, contact your attorney.

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