Most people know about homeowners’ insurance, but some may not know that title insurance is also an option. Title insurance gives homeowners an extra layer of protection in the event there are issues with the property.
What is Title Insurance?
When any property is sold or bought, including a single-family home, apartment, or commercial property, the record is then stored in a public archive. Any event that can affect the ownership of the property, like issues with zoning or other types of liens, may also be archived and become part of the title.
Who Needs Title Insurance?
When title insurance is purchased, the title company then performs a search to look for records attached with ownership of the property. These can include the deed, taxes, and even court records to verify who owns the property.
If there are any issues with the transfer of title, having a policy in effect can help both the buyer and seller avoid serious financial repercussions. This can be extremely important if someone comes forward laying claim to the property. Title insurance will pay the policyholder when there’s something wrong with the title. Some of the most common forms of title claims include:
- Liens
- Fraud
- Unknown heirs
- Public record errors
Whether someone needs title insurance coverage depends on many things. While it can be useful to have if issues are discovered with the title’s record, it may not be worth it if the property is very old. The actual cost of title insurance will depend on the type of policy and the location of the property.
Usually, title insurance can cost approximately $1,000. Again, it will depend on how much the property costs and where it’s located. If there’s any risk of being sued, then purchasing title insurance might be a good idea.
The Takeaway
Buying real estate is a considerable investment of both time and money. As such, it’s never a bad idea to have coverage in case something goes awry. While not every home requires extra title insurance, many do. If in doubt, invest in the help of a licensed insurance broker who can explain in detail whether buying a policy is the right thing to do.