The Ins and Outs of Title Insurance

There are a number of different steps you will have to go through to finalize the purchase of your new home. Purchasing title insurance is one of the unfamiliar steps but is vitally important. Title insurance is there to protect you and your lender from sticky legal situations that involve claims to ownership of the property that you are buying. A title is the document that gives you ownership and it is key that your title is “clear” or does not have other claims against it like liens, easements, or unknown owners.

There are some interesting situations that can occur during the home buying process that make it necessary to have title insurance to protect yourself and your lender. On the most extreme end of the scale is criminal activity like home selling frauds where a property is deliberately sold by people who do not have legal ownership. More typical are issues that have to do with wills that are out of date and questions regarding inheritance and who owns and can sell a house; cosigners for a seller such as in cases of divorce; or liens, or legal debts against a property that need to be paid from the proceeds of a sale.

Purchasing title insurance is managed by your closing attorney and built into your closing costs. It is a one-time expense that provides long-lasting protections. Your closing attorney and real estate professional will guide you through this process.

Title insurance is a combination of two policies: one for the lender and the other for the borrower. Your lender wants to make sure that the loan it is providing is for a legitimate and legal transaction. You will not be given a loan unless you have lender’s title insurance, also called a mortgagee’s policy, which covers the amount of the mortgage.

You will also purchase an Owner’s Policy of Title Insurance. This policy covers your legal fees and losses including financial coverage if you lose your home due to a title dispute. Even if this policy is not required by your lender, it is worthwhile to purchase. It will protect you from unforeseen problems and claims against the title to your home that could arise in the future. Your attorney will issue the policy, provide you with the paperwork, and explain how it works. Most policies even include inflation riders for added protection.

Your Attorney can help you understand more fully the need for title insurance and how to take care of purchasing these policies.

Count on our experienced team at Ericson, Scalise & Mangan, PC to provide you with sound guidance for your Estate Planning, Elder Law, Real Estate, Probate, Trust & Estate Administration, and other legal needs. For assistance, contact us today at (860) 229-0369, or email us atĀ info@esmlaw.com.