The one-time payment of Title Insurance protects the homebuyer for the length they own their home, but it is not required. So, why buy title insurance?
First, What is Title Insurance?
Title Insurance is an insured statement of the condition of your ownership rights to a certain piece of property. An Owner’s Title Policy describes your property in detail, and states what limitations, if any, there are to your ownership. A Title Insurance Policy Protects against loss from certain claims on real estate. First, the title company will search public records to find and remedy any ownership issues. However, not all defects in the title can be found by examination of public records. Regardless, a Title Insurance Policy will protect against both defects, whether they are discovered at the time of closing or later on.
Do You Need Title Insurance?
Owner’s Title Insurance is optional, so the question is should you purchase Title Insurance? The consequences of not purchasing Title Insurances could be dire, and the risk completely falls on to you, the homeowner. Anything from unpaid taxes to fines from code violations could come up after the property purchase, and without a Title Insurance Policy, the financial burden falls entirely on the homeowner. So, while you might think there are no risks at the time of purchasing your home—and you might discover none at that time—unpaid contractors, issues with code violations, or other defects could present themselves any time later on.
And the risks do not stop there. If you are uninsured and unable to make these new, unexpected payments to maintain the title of your property, then your home could be forfeited to whatever entity that has come to collect. All of this was from no fault of yours, and could have been avoided with the protections that come with Title Insurance. Yet, you are the one who bought the home and property, and therefore all of these unknown issues that came along with it. So, ask yourself, do you need Title Insurance?
What Does Title Insurance Cost?
Clearly, Title Insurance seems to be worth its price. But how much does it typically cost? This one-time premium can range from anywhere between $500 and $3,500, depending on the state and insurance provider. With this single payment, it provides protection for the entire duration you, and any heirs, own the home.
What Does Title Insurance Protect You Against?
There are many risks to your title that can appear when you buy your home or that come up some time during your ownership. Even if your home is purchased brand-new, that does not mean there wouldn’t be issues with the previous land-owners or conflicts with the builder and the contractors. So, Title Insurance serves as protection against these risks to your title:
• A former owner’s unpaid child support
• Boundary disputes
• Building code violations by a previous owner
• Claims by an ex-spouse who didn’t authorize the sale of the home
•Claims related to a forged power of attorney
• Conflicting wills
• Errors on the property deed
• Improperly recorded documents
• Liens from contractors, taxing entities, or previous lenders
• Property survey errors
While some may think these scenarios unlikely, or believe their thorough search of the property’s history has resolved any risks, this one-time payment is a small price to pay for a sense of security. Not only does Title Insurance protect your title for the full duration you own the home, but it can also be passed onto your heirs. While the decision is ultimately up to you, it’s difficult to think of why you wouldn’t protect your home and title with just a one-time premium to preserve a Title Policy.