Tips for Buyers: What is Title Insurance and Why Do I Need It?
When purchasing a new home, there will be many types of insurance that you will be required to purchase as well as ones that are optional. One form of insurance that is both required and optional is title insurance. No matter whether you’re looking at purchasing Nashville TN real estate or Warner Robins Homes, title insurance can provide you with an important type of coverage at relatively little cost, and thus it is important to learn more about what this type of insurance is and why you need it.
What is Title Insurance?
As the name suggests, title insurance is a form of coverage that provides protection if problems arise regarding the property title. If you are taking out a mortgage loan, the lender will require you to purchase title insurance. It is important to note, however, that the required coverage only provides the lender with protection. Therefore, in order to protect yourself, you will also need to purchase a personal title insurance plan.
Title insurance may be purchased for a one-time fee and it remains in place as long as the person who is insured retains an interest in the property. If the insured person passes away, the coverage remains in place for as long as the insured’s heirs retain an interest in the property as well.
Why Do I Need Title Insurance?
Title insurance provides you with protection from the hidden risks that may be associated with your purchase. For example, if it is later determined that there are missing or forged documents or if mistakes were made when recording the legal documents associated with your property, you may suddenly find yourself owing back taxes or you may even discover that you do not legally own the property. In either case, you could find yourself losing a significant amount of money. With title insurance in place, you do not need to worry about facing a financial loss because it will be covered by your insurance policy. Not only will the policy pay for your losses, but it will also pay to defend you against any lawsuits associated with the title and will help to clear up any title problems that you may face.
In short, if you do not obtain title insurance, you may not be protected against errors in public records or against any hidden defects or mistakes in public records. Given the relatively low cost of the insurance and the level of protection it provides, it is certainly worthwhile to purchase personal title insurance in addition to the insurance you are required to purchase on the behalf of the lender.
Thanks to Josh Anderson for contributing to this article. He is a Nashville real estate specialist, including Bellevue TN homes for sale, as Realtor for Nasvhille Keller Williams.
5 Response Comments
I was just reading about this the other day too. I can’t imagine an agent wouldn’t suggest their buyers get title insurance to cover themselves but apparently it happens more often than it should. Such a small cost compared to the loss that can occur.
Sadly they do Rich. It’s like playing Russian Roulette.
Anita, as a buyer a few years ago, I’m so glad we bought title insurance. With my husband’s name being the same as his father’s, and his father first buying the property and transferring it to him, then buying the property next door FROM him, and his father also owned a lot up the street, it was a nightmare. To make it worse, the way the subdivision was formed, our lot was Lot #6 and the one next door we sold was Lot #35. His father had passed away so the property was deeded to my husband’s mother, who buried her head in the sand and didn’t want to deal with it. It took 8 months to get the title straightened out. I’ll never purchase a home without it. Can you imagine what a lawyer would charge for dealing with that for 8 months?
Lynda…yours is a great example of WHY I always recommend to my clients that they spend the money and get the Title Insurance. Thanks for sharing your story so others can learn! 😉