When you buy a home you want to make sure that after closing you are protected against any claims against the title from previous owners. Prior to closing, the title company will perform a title search, to determine your properties potential title risks. However, there can be information out there that they are unable to find, especially if it isn’t a public record. In, this case you and your lender will need to have title insurance. By purchasing title insurance you and the lender will be protected against any claims against your title.
Owner’s Policy and Lender’s Policy
When you buy a home, your lender will require you to buy lender’s title insurance, which protects the lender’s interest in your property.
To protect yourself against title risk, you can purchase a separate policy called owner’s title insurance. This policy is purchased at closing for a one-time fee based on the price of your home. Your owner’s policy will pay for all court costs and related fees of any covered title risk. If a claim on the title is found valid, you are covered up to the face value of the policy
Potential Title Risks
- Undisclosed heir with ownership rights
- Improperly signed or recorded documents
- Forged deeds, wills
- Lack of competency or legal authority
- No access to property
- Unsatisfied Lien