If you’re buying or transferring real estate, the title to that property must be free and clear with no judgements, liens, unknown owners or heirs attached to it, to prevent anything going wrong with the purchase or transfer. If there is a loan involved, a lender’s title insurance policy is required to be purchased.
However, to fully protect a property owner, he or she should purchase owner’s title insurance which is called an owner’s policy. A loan policy will only protect the lender and it is in your best interest to purchase an owner’s policy which will protect your interest in the property.
What is Owner’s Title Insurance?
Owner’s title insurance provides protection if someone should make a claim against the home from a time before you purchased it, a claim that went undiscovered during the rigorous title search taking place prior to sale. In short, owner’s title insurance protects against any problems that might come up after you buy your house.
What kinds of problems could occur?
Past owners may not have completed paperwork correctly
Deed filed Incorrectly
Falsified or forged information on the deed
Mortgage fraud
Liens, for example debts filed against the property such as from an unpaid contractor or home association dues
Encroachments due to an unclear property line
Easements undiscovered during the process of purchasing the property such as easements from a utility company or shared road
Remember, even though a title search is thorough and completed before your purchase closes, issues can still appear after you are the owner.
The Difference Between Lender’s and Owner’s Title Insurance
Lenders routinely require a loan policy for which a one-time cost is paid up front. Lenders insist on the issuance of title insurance to protect their interest in the loan. After all, they’re responsible for most of the home's value, especially during a mortgage’s early years. Once issued, the loan policy protects the lender only as to the validity, enforceability and priority of its lien against title defects.
Owner's title insurance protects you personally from a title claim that can come up at any time after a purchase. Again the loan policy only protects the lender and you will need an owner’s policy to protect your interest in the property.
While not required, it provides excellent peace of mind for the purchaser, and is bought along with lender’s title insurance for a single fee. There are no ongoing payments; cost is typically a small percentage of your home’s purchase price.
The policy covers legal fees and court costs, as well as the cost of problems such as unpaid property taxes. With owner’s insurance, you won’t have to worry about paying out of pocket for a problem you’re not responsible for.
Title Insurance at Conestoga Title
At Conestoga Title, we help to make your purchase of commercial and residential properties a safe and smooth experience. Our goal is to always make buying or refinancing a property as easy and simple as possible. Our team of professional underwriting attorneys, agency and marketing representatives provide independent agents with quality, skilled support and personal attention.
If you have any questions about title insurance or any aspect of the process, we’re ready for your call.
We’re skilled and experienced professionals in title insurance and title search. To learn more, contact us at Conestoga Title, today!