Protecting Your Home with Title Insurance
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Purchasing a home is likely the biggest investment you will make in your lifetime. So before you close, you need to be sure that that no one else has a claim to the property.
A title company ensures that your new property is free of encumbrances and other legal obstacles.
You pay the title insurance company a single premium which includes the cost of verifying clear title and covers you in case some fault is later discovered in the title.
The title insurance company performs an extensive search on the property's title history. The title company can almost always identify any title problems and have these problems cleared-up before you close on the property.
Because Real Estate Law is so complex, you need an expert to make sure that all previous transactions have been correct, so you don't end up with legal problems or a problem selling your property. Your title insurance owner's policy will describe the property and outline the limitations on your ownership. It will also set forth the title insurance company's responsibilities should any claim covered by the policy terms arise. Typically your title insurance will protect you in the following cases:
- Contested title — This usually happens when someone who owned or even lived in the home before you claims to still hold an interest. If this happens, the title insurance company will defend the title and will cost you nothing.
- Defective title — This is a general term for a legal problem with the title that cannot be corrected and includes "contested title" above. Defects are rare, but they can be very difficult, making the property inaccessible, unable to be built, or unsaleable. Any number of other complicated problems define "Defective title." The title insurance policy will protect you from these errors if the title company misses them.