It is often purchased by the buyer and can help to safeguard against financial loss due to title defects or challenges to the ownership of the property. In essence, title insurance helps to ensure that buyers are purchasing a piece of property with good title and clear ownership.
Title insurance works by protecting the title of a property from any claims or legal disputes that may arise after the purchase of the property. It does this by providing financial compensation to the insured if a title issue occurs. Title issues can include fraudulent documents, undisclosed liens, forgery, improper claims, concealed or unrecorded documents, prior owners of the property, and more. By purchasing title insurance, the buyer can be confident that they are buying a property with a clean title and will not be subject to any future legal challenges.
The title insurance policy also includes coverage for a variety of title-related risks, including unseen title defects and unforeseen liens. It also covers the lender’s interest in the property if the loan is not paid off in full. This means that if the homeowner defaults on the loan, the lender is protected and can repossess the property without fear of any legal claims or challenges.
There are two main types of title insurance policies: the owner’s and the lender’s. The owner’s policy covers the buyer should a title issue arise, while the lender’s policy covers the lender’s interests. Both of these policies provide important protection, but they come with different costs associated with them.
Title insurance is an important addition to the home buying process and can provide significant protection to both buyers and lenders. It helps to ensure that buyers are buying a property with good title and clear ownership and gives lenders the assurance that they will be able to repossess the property if the loan is not paid off in full. Title insurance also provides coverage for unforeseen title problems, including fraudulent documents, undisclosed liens, incorrect claims, and other potential title issues. By investing in a title insurance policy, buyers and lenders can both rest assured that they are buying and financing a piece of property with a clean title.
This article was contributed on Aug 02, 2023
