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Do I Need Title Insurance If I Pay Cash?

Updated: Apr 25, 2023

stack of $100 dollar bills with a wooden house keychain and keys

Purchasing a piece of real estate is one of the biggest investments you may make in a lifetime - but also one of the most rewarding.

As you head into the closing, though, you may want to take caution. You will likely be asked whether or not you’d like to purchase an owner’s title insurance policy. If you are taking out a loan to buy the property, your lender will almost always make the purchase of a lender’s title insurance policy a mandatory condition of the loan. If your purchase is a cash transaction, then you get to decide whether you want the title policy or not.

Before you are quick to eliminate any optional costs, consider the importance of owner’s title insurance - even if you are paying cash.

What is Title Insurance?

Title insurance is a type of coverage that protects the property owner from any financial loss due to issues with the property’s title. There are two types - a lender’s title policy and an owner’s policy.

The lender’s title insurance policy protects the lender, reducing any risk for lending the money attributable to title issues. A lender will often make purchasing this policy a condition of the loan. An owner’s title insurance policy is one that protects the owner in case something goes wrong with the title. Purchasing this policy is at the discretion of the buyer. Purchasing owner’s title coverage in conjunction with the required lender’s title coverage is a small additional investment.

Unlike other types of insurance, title insurance protects you against things that happened in the past before you took ownership. These things may have, for one reason or another, been missed in the title search or uncovered after you take ownership..

A few of the most common title issues that may arise include:

  • Outstanding taxes

  • Clerical mistakes

  • Forgeries / fraud

  • Legal cases

  • Unknown heir

  • Missing will

  • Erroneously recorded judgments

  • Easements

Each of these things can threaten your rights to your property. Fighting these issues on your own can be time-consuming and very costly. Plus, there is no guarantee that you will even win the battle. You could lose your home - and the funds you spent trying to fight for it.

With title insurance, you are protected. The title company will handle the fight for you and protect you from financial loss.

Title Insurance For Your Cash Investment

If you pay cash for your property, you still want to protect yourself with a title insurance policy. After all, how you fund your purchase doesn’t have any bearing on title insurance or the title issues that may arise. The only difference is that you get to choose whether or not you want to spend the extra money on this policy of protection.

You could live in your home for 50 years and never have a title issue. Or, you could take title to the property today and face a threatening title issue tomorrow. The truth is, you don't know what the future holds. But, preparing yourself for whatever comes your way can give you peace of mind and the chance to just enjoy your new home. And for most cash buyers, that is worth the additional cost.

Learn More About Title Insurance

The title experts at Conestoga Title can help you understand the importance of title insurance - and answer any questions that you may have. Regardless of how you purchase your new property, making the investment for title insurance is a great way to ensure that you are protected for as long as you have an interest in it.

To learn more or to get started, contact us today at 800-732-3555.

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