Protecting Your Home with Title Insurance
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Buying a home will likely be the biggest investment you make in your lifetime. So before you sign on the dotted line, you must be certain that the "title" of the property is free of other claims.
A title company ensures that your new property is free of encumbrances and other legal obstacles.
You pay the title insurance company a single premium which includes the cost of verifying clear title and covers you in case some fault is later discovered in the title.
The title company performs an extensive search on the property's title history. The title company can almost always identify any title problems and clear up these problems before you close on the property.
Real Estate law is extraordinarily complicated. Title companies make sure that all the T's are crossed and all the I's are dotted so you don't end up with a clouded title and legal problems. Your title insurance owner's policy will describe the property and outline the limitations on your ownership. It will also set forth the title insurance company's responsibilities should any claim covered by the policy terms arise. Typically your title insurance will protect you in the following cases:
- Contested title — Someone, usually a previous owner or occupant, claims they still own the property or have not given up their claim. If this happens, the title insurance company will defend your title at no expense to you.
- Defective title — "Defective title" covers any number of problems with the title to your home. It can even include a "contested title". Other examples of title defects include problems with legal access to the property, easements that make the property less usable, unusable, or unsaleable. Many other complex problems define "Defective title." The title insurance company will discover these title problems, or if they miss them, protect you from financial loss - up to the amount of the policy.