Title refers to a person’s legal rights to ownership and possession of land. Whenever property is sold, the title (or rights to the property) is transferred from the old owners to the new, by virtue of a deed. The deed is then filed with the Register of Deeds office for the county in which the property is located.

However, there may be others who have an interest in the property or have a lien claim on it, including:

• The owner, their family, or heirs
• Governmental bodies
• Contractors
• Lenders
• Judgment creditors
• Internal Revenue Service, or
• Any other individual or corporation

To help simplify these matters, we always recommend that you hire a title insurance company to perform a title search of the property before your purchase is final. This search will assist the examiner or closing agent in determining whether there are any fraudulent conveyances, unrecorded documents, unpaid property taxes, unreleased liens, issues with the legal description of the property, and more.  

Real estate may still be sold to you without any knowledge of existing problems and even the most careful examination of public records doesn’t guarantee that these problems won’t be discovered for months – or even years – afterward. As a result, you could be forced to spend substantial amounts of money on a legal defense just to protect your rights. 

When you have title insurance, you receive coverage for any claims or legal fees that may arise in the event of a dispute. According to the American Land Title Association, one in four real estate transactions uncover a title complication of some sort. More than $600 million per year is paid out by the title insurance industry. Not having title insurance can cost you exponentially more than paying for it does. 

When it comes to the types of Title Insurance available, there are two: Lender’s Policy and Owner’s Policy.

A lender’s policy is designed to only protect the lender. If you take out a mortgage, then your lender will likely require a policy for an amount equal to the loan. You, the borrower or buyer, pay the one-time premium at closing.  

• Coverage for a lender’s policy remains in effect for the life of the loan 
• Coverage stops once the loan is paid in full and released 
• Coverage does not protect the owner’s equity in the property 

 To help fully protect yourself, you should also consider an owner’s policy. 

Unlike lender’s insurance, an owner’s title insurance policy is meant to provide protection for the full value of the home.   

Owners often assume that since they had a title search performed or have paid for lender’s title insurance, they are protected from liability or don’t need to purchase an owner’s policy. This is a mistake. Since a lender’s policy would only cover the lender’s loss, it’s important to purchase an owner’s policy that will protect you in the event of the following:

• Forged documents 
• Invalid deeds 
• Incorrect property descriptions 
• Recording errors 
• Deed indexing errors 
• Unpaid mechanic’s liens 
• Judgment liens 
• Income tax or property liens 
• Undisclosed easements or encroachments 
• Claims from missing heirs or ex-spouses 

With an owner’s title insurance policy in place, you’d be covered in a range of instances, including defending your title, the cost of settling covered matters legally, and paying you for the loss due to a covered matter.

We advise that you purchase both a lender’s and owner’s policy simultaneously to receive a discounted rate. There is a standard policy and enhanced policy. We’re happy to explain the differences in both coverage and cost to you. 

When the home you purchase is a new construction, you may think that as the property’s first owner, you don’t need additional protection. However, the unimproved land the house is being built on has likely had several prior owners. In addition, builders may fail to pay subcontractors and suppliers, which can result in a lien being placed against the property. 

Just as lenders require a clear title and policy to protect them, you should have one, too, to protect your interest against covered issues that can arise even with a new home. An owner’s policy will do that and pay for legal fees involved in defending a claim

When you refinance, you’re obtaining a new loan, even if your lender remains the same. Problems may still crop up in the future, like a judgment lien against the property for unpaid taxes, homeowner’s association dues, or child support. Your lender will require a title insurance policy to protect their interests and investment in the refinanced property.  

If you’ve previously purchased an owner’s title insurance policy for the home, however, you won’t need a new one. Your policy is good for as long as you and your heirs have an interest in the property. You may also be eligible for a discount rate if it’s been 10 years or less since you’ve purchased or refinanced the home. Be sure to ask us for details

You don’t want your closing delayed due to title issues. You can encounter a lot of problems when buying a house without clear title. Having a title search performed and purchasing both a lender’s and owner’s policy can help to safeguard you in case of: 

• Fraud and forgery 
• Conflicting wills  
• Missing or undisclosed heirs 
• Prior outstanding liens 
• Underage or non-resident signor 
• Errors or omissions in deeds 
• Mistakes in examination of records 
• Liens by contractors, subcontractors, or suppliers 
• Liens for unpaid property taxes 
• Liens executed under false or expired Powers of Attorney 
• Incorrect representation of marital status 
• Easements not discovered by a survey