Why Do I Need Title Insurance?
What is title insurance?
Title insurance is protection against losses that occur from various matters affecting the title to real estate that you are about to acquire. Unlike other types of insurance, where you typically think in terms of the payment of future loss due to the occurrence of some future event, title insurance is different. It provides coverage for future claims or future losses due to title defects which are created by a past event (an event prior to the acquisition of the property.) These risks are far less obvious than those protected against by automobile insurance, but can be just as devastating.
It is extremely important that when you purchase real estate, you receive clear title to the property. In order to do so, you must be informed of any existing rights or claims that may, in the future, threaten your title and possession to the property. Title insurance provides you with this twofold protection.
Do I have to purchase title insurance?
Yes, if you are getting a mortgage, because all mortgage lenders require the protection. This is called a loan policy and is issued for an amount equal to the amount of money being borrowed.
If the bank requires a Loan policy, why do I need to buy an Owner’s policy?
The bank’s policy only protects the interest of the bank. YOU, the homeowner, may be liable for title problems even though the bank is insured.
I paid for a title search – why do I also need to buy title insurance?
Not everything can be discovered by examination of public records. A title policy insures against many defects, which could not be discovered in a title search. It also insures against errors made in the title search itself.
Is Owner’s coverage expensive?
No. Unlike other forms of insurance, the one-time premium is your only cost, as long as you or your heirs own the property. There are no annual payments to keep your Owners policy in place. When you are already paying for a loan policy, the additional cost for an Owner’s policy is usually minimal.
What is covered under an Owner’s Policy?
As a homeowner, you will receive the following coverage from your Owner’s policy:
- Insurance that you are the owner of the property
- Insurance against losses from any liens or encumbrances on the property except those listed in the policy
- Insurance against your title being rejected by a subsequent buyer because it is unmarketable due to a title defect or lien
- Insurance that you have a legal right of access to the property
The title policy not only protects you against losses due to title claims covered by the policy, but it also pays for the attorney fees and costs in defending the title.
You are covered under the policy for as long as you own the property, and also for liability after you sell the property if you provide title covenants in your deed to the new buyer.
Will Title Insurance Protect My Asset?
Title insurance gives you the assurance that possible marks on the title to the property that you are purchasing have been called to your attention and such defects can be corrected before you purchase. Additionally, if any undiscovered claims covered by your policy arise out of the past to threaten your ownership of real estate, it will be disposed of, or you will be reimbursed exactly as your title insurance policy provides.
Why La Playa Title?
La Playa Title is an independent, licensed title agent that works with the major underwriters nation wide. We are committed to working closely with our clients to deliver the products and services that best fit their needs. Since we are able to make underwriting decisions at the local level, the settlement process is never stalled. The ability to work with various underwriters also allows us the opportunity to get second opinions on complex title issues and work collectively to solve title problems.
Top 10 Reasons Why You Should Have Owner’s Title Insurance:
- Fraud in the execution of documents
- False impersonation by someone purporting to be the owner of the property
- Incorrect representation of marital status
- Incorrect legal descriptions
- Unsatisfied claims not shown on the record
- Confusion due to similar or identical names
- Dower or courtesy rights of spouses of former owners
- Incorrect indexing of the land records
- Clerical errors in recording legal documents