Buying a home is one of the biggest investments you'll ever make. Title insurance is the "safety net" that protects your ownership rights from hidden legal issues.
What is Title Insurance?
Title insurance is protection against loss arising from problems connected to the title of your property. Before you purchased your home, it may have gone through several ownership changes, and the land on which it stands went through many more.
There may be a weak link at any point in that chain that could emerge to cause trouble. For example:
- Forged signatures in transferring title.
- Unpaid real estate taxes or other liens.
- Survey errors regarding property boundaries.
Title insurance covers the insured party for any claims and legal fees that arise out of such problems.
Am I required to purchase Title Insurance?
Title Insurance is required if you need a mortgage, because all mortgage lenders require such protection for an amount equal to the loan. It lasts until the loan is repaid. As with mortgage insurance, it protects the lender but you pay the premium, which is a single-payment made upfront.
Who is protected with Title Insurance?
Title insurance policies can be issued in favor of a purchaser (on new/resale homes, condos and vacation properties), a lender, or both. Risks frequently covered include:
- Survey irregularities or forced removal of structures.
- Claims due to fraud, forgery, or duress.
- Unregistered easements and rights-of-way.
- Zoning and setback non-compliance.
Note: Environmental hazards and native land claims are normally excluded. Always discuss specific risks with your lawyer.
When does the insurance coverage end?
For the Purchaser: It remains in effect as long as the insured purchaser has title to the land. Some policies also protect family members (spouse or children) if the property is transferred for nominal consideration.
For the Lender: The policy remains in effect as long as the mortgage remains on title. Lenders are usually covered up to the principal amount of the mortgage.
The premium for title insurance is paid once (at the time of purchase). Some policies automatically cover both the purchaser and lender for a single fee.
Protection and Peace of Mind
Title insurance can help ensure that a closing is not delayed due to defects in title. If an issue arises covered under the policy, the insurance covers the legal fees and expenses associated with defending your title and pays in the event of loss.