Buying a home is one of the most important moments in the life of most people. It is a big step that requires a lot of money and once you have enough money, you will be very happy and can’t wait to move into your new home. While this is completely understandable and you can hardly wait to think about the color of the facade, interior design and what material you will use for the porch, and then what garden furniture you will buy, you must first think about some other things. You have to think about those other things to avoid getting into trouble before you have officially become the owner of a particular house or other type of property.
One of the most important steps in the process of buying a home is the title. While it seems logical that you will obtain a title once you pay for the house, it can be much more complicated. If there are ambiguities with the ownership of the right seller or something like that, you may even lose all your money, which would be catastrophic, because it is hundreds of thousands of dollars. But there is one way to protect yourself from all potential problems and that is title insurance. Keep reading and find out all that is important to know about title insurance in 2024.
1. What is title?
Let’s start with the basics and first explain what exactly title and title insurance are. Since the issue of title of property is a term from property law, many who are not familiar with property law and law and general are not 100% sure what the title really is.
A title is the legal documentation that represents the bundle of the rights of the owner of the property. If you are a first time buyer, you may have never heard of a title, but you need to know that a title search is what you need to do before the last step in a real estate transaction called closing.
2. Common title problems
Probably some of the first things that come to mind are forged documents or false impersonation. While these are certainly real problems and something many home buyers have encountered, those are not among the most common title problems. Common title problems include an unresolved inheritance situation, for example when an heir appears who has been unjustly excluded from the inheritance or a new will is found. Then, it may happen that your new home comes with a lien or that the previous owner goes bankrupt, which significantly complicates closing. Also, disputes with neighbors over where one proper ends and the other begins are often. All this and much more can lead to the closing process taking much longer than expected or worse, jeopardizing your investment.
3. What is title insurance?
Title insurance is a type of insurance that can protect both the buyer and the lender. If you are title insured, any defect with title which may occur after you have bought a house or after you have lent someone money to do so falls under the jurisdiction of the insurance company that will cover the various legal damages. Which legal damages will be covered depends on the policy, which of course varies from case to case, as with any other type of insurance.
4. What happens in case you don’t have title insurance?
Since as a homebuyer you have a lot of expenses, you definitely want to avoid every possible extra expense and then you wonder what happens in case you don’t have title insurance and some title issue arises after buying a home. The situation is very clear, in case you don’t have title insurance if lien appears on your property or someone wants to claim ownership of your home, all the costs of litigation, settlements and everything else you will have to bear yourself. Even if you win in court, you will have a lot of costs until then, and that can lead to big financial problems, and even lead to the loss of property or bankruptcy.
5. How much does it cost?
It is never possible to say exactly how much insurance will cost, but there are general rules that apply to title insurance. It is a one-time premium policy, which is usually about 1 percent of the home’s value, in some cases less than 1 percent. It depends on the insurance company as well as the state. You will pay it at closing, when the exact home’s value is known. This means that it is unlikely that your insurance titles will cost less than a thousand dollars, and that figure can be significantly higher. But it is definitely a worthwhile investment, because a few thousand dollars investment, protects a few hundred thousand dollars.
If you want to know how much money you will need to set aside for title insurance, take advantage of rate calculator available at http://www.sunnysidetitle.com/
6. Can insurance company refuse to offer a policy?
Yes, it is certainly possible. The insurance company will conduct a thorough research before deciding whether to offer you a policy, what the conditions will be in the policy, or whether company may refuse to offer you a title insurance policy. In case company refuses to offer you a policy, it means that the title has many defects or that a lot of important information are vague, so that the company would take too much risk on itself. But even if company rejects you, it is very useful for you, because it means that you most likely need to give up buying that property.
Conclusion:
In the introduction we said that buying a home is one of the most beautiful and important events in life. But like everything that is very important, the whole process of buying a home is very stressful even when you have title insurance. And when you don’t, then you are completely unprotected and even after moving into your new home you may face a number of very serious problems. So choose a reputable insurance company and pay for title insurance as soon as you start looking for a new property.
