Do I Need Title Insurance?

As an attorney that handles many real estate closings each year, a question I often get asked by purchasers is “Do I need title insurance?”  My answer is almost always “yes, you should get title insurance”.  Purchasing a home is often one of the single largest investments of a person’s life.  You wouldn’t think of not insuring your property against fire damage, and the truth is that title claims have the potential to be just as devastating.

Owner’s title insurance is a one-time fee paid when you purchase your property, and protects your property rights for as long as you or your heirs own the property.  An owner’s title insurance policy guarantees that the property you are purchasing is free of undisclosed liens, and that you own the property you have purchased.  A title policy also describes your property and states any limitations on your ownership, such as easements or restrictions.

There are many risks that an owner’s title insurance policy protects against.  Some of those risks are:

  1. Forged documents.
  2. Signatures of mentally incompetent persons.
  3. Undisclosed heirs.
  4. Fraud.
  5. Misrepresentation of marital status.
  6. Clerical errors in public records.
  7. Undiscovered liens or judgments.
  8. Deed executed under falsified or invalid power of attorney.

If you have purchased an owner’s title insurance policy and later a covered title problem is discovered or your ownership rights are challenged, the title insurance company agrees to:

  1. Defend your title in court.
  2. Pay the cost of settling a valid claim.
  3. Correct or clear the title when possible.
  4. Pay you for your loss in the event of an unsuccessful defense of your title.

In summary, while it is unlikely you will ever need to make a claim on your title insurance policy, it provides peace of mind knowing that if a title issue does come up after your purchase, your investment will be protected from a potentially devastating loss.

Bolin & Troy, LLC is a licensed agent for First American Title Insurance Company.

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