Your home is probably the largest investment you’ll make in your lifetime, so it only makes sense to protect that investment. Title insurance is designed to protect ownership rights should something come up in the future.
On occasion, a title flaw may go undetected. Among the most common flaws to title include forgery, invalid court proceedings, mistaken legal interpretations, defective deeds, name confusion and unrecognized rights of undisclosed heirs. These kinds of issues can come to surface at any time.
The title insurance policy is issued after your transaction is complete. The policy requires only one premium to protect the purchasers and their heirs for as long as they own the property. There are no renewal premiums or expiration dates, unless the property gets refinanced with another lender.
Each policy becomes a contract of indemnity that agrees to assume the responsibility for legal defense of your title for any defect covered under the policy’s terms and to reimburse you for financial losses up to policy limits.
Why you should have title insurance:
- There could be a forgery in a deed or mortgage somewhere in the home’s previous ownerships
- A person under age (minor) may have signed a deed or mortgage
- A fire can destroy your home and the improvements you’ve made, but the land still exists and a defective title could take that land away from the owner
- A person who has been proven to be medically incompetent may have executed a contract
- Something executed by a power of attorney after its termination could have occurred which might make the deed void
- A person with the same name as the owner may have made a deed or mortgage on the property
- A child born after the execution of the will would entitle the child to claim her or her share of the property
- Title transferred by an heir might be subject to a federal estate tax lien
- A judgment or levy upon which the title is dependent might be voidable due to a defect in the proceeding
- If claims arise the title insurance covers attorney fees and court costs
- Only title insurance protects against claims made by non-existent or divorced spouses
- With identity theft climbing, claims have risen dramatically over the last 10 years
