What is Title Insurance?
When you buy a home, you receive a title to the property, which generally means you receive full legal ownership. But—sometimes there's a hidden defect in a prior deed, will, mortgage, etc., that may give someone else a valid legal claim against your property, Title insurance is therefore, protection against loss if a covered defect is found in your title. Having title insurance can save you money, time, trouble—even your home!
When you buy a property, you are commonly required to buy title insurance that covers the lender for the outstanding balance on the mortgage, but does not protect your equity. If you purchase Owner's Title insurance, a few of the coverages are as follows:
- Errors made through incorrect information in deeds, mortgages, public records, etc.
- Liens or claims against the property or the seller that become the new owner's responsibility after the sale. Examples are: unpaid mortgages, taxes, sewer and water assessments, and bills owned to other creditors.
- Claims to ownership by the spouse of a former owner or by a child of a former owner who was not mentioned in his or her parents' wills.
- Invalid deeds, possibly from a previous seller who did not actually own the property, or by a previous owner who was not mentally competent.
Please note that many of these problems would probably not be discovered in a routine title search!
In addition to standard coverages, title insurance policies also contain standard exceptions, some of which are as follows:
- Limitations on land use, such as laws against farm animals.
- Easements, rights of way and other legal obligations noted in the deed or in the public records.
- "Restrictive covenants" and agreements limiting certain types of use of your property.
You pay a one-time premium for title insurance which is based on the loan amount (for the lender's policy) and based on the purchase price (for the owner's policy).
Please ask a Sterling Land Title representative what the cost of your policy would be. Also, please ask about the issuance of simultaneous policies. As stated above, your lender will most likely require you to purchase title insurance to protect them; however, you can save money if you elect to purchase the Owner's Title Insurance Policy to protect your interest at the same time through the simultaneous issue discount.