hen buying a home, title Title insurance protects the
insurance will certainly lender (and possibly the
come up at some point. homeowner) against losses that
It's an important part of the might arise from property
home buying process, so it's ownership disputes. The
equally important that you importance of title insurance can
understand what it is and how it best be illustrated through an
can protect you. example:
What's a Title? Let's assume you're buying a
house, and that the title search
A title is a written document comes up clean. So you close on
that shows ownership of property. the house and move in. Two months
It includes the signatures of later, a relative of the former
current owners and a legal owner shows up at your door,
description of the property. A claiming that they were part
title is also known as a deed. owner of the property, and that
they never surrendered or signed
Before you close on a new home, a away their ownership.
title examiner will conduct a
title search. This is a review of This is an ownership dispute, and
public records and legal it could mean you'll have to go
documents to ensure that the to court to defend your ownership
seller is the true, legal owner of the property. If you have
of the property, and that there title insurance, it will likely
are no unsettled claims or liens cover your court costs.
against the property.
Let's further assume that the
What is Title Insurance? former owner's relative was
telling the truth. This means the
title examiner overlooked a
defect or "cloud" on the title. If the lender requires that you
Somewhere along the line, take out a policy in both their
ownership of the house was not name and yours, then you have no
properly transferred. It's not decision to make. But if your own
your fault, but you're still coverage is optional under the
caught in the middle. lender's rules, you have to make
a decision.
In the event that the court rules
in favor of the former owner's Personally, I think title
relative, title insurance again insurance is a relatively
comes into play. Title insurance inexpensive purchase, given the
will see to it that the lender is peace of mind and protection it
repaid for the mortgage loan, and affords. I'll always purchase
that you are repaid for your title insurance when buying a
investment in the property (up to house.
the maximum amount allowable
under the policy). Lastly, keep in mind that title
insurance only protects you
Your mortgage lender will require against title errors that were
you to take out a title insurance made before you closed on the
policy in their name. This house. Title errors that take
protects their financial place after you close on the
interests, and it will most property will not be covered a
likely be mandatory. But the title insurance policy.
title insurance that protects you
can be purchased separately, and * Copyright 2006, Brandon
in some cases you'll be able to Cornett.
choose whether or not to buy it.
About the Author:
Brandon Cornett is the editor of http://HomeBuyingInstitute.com, one of the Internet's largest and most respected libraries of home buying information -- more than 100 expert articles in 12 different home buying categories! Put this knowledge to use by visiting http://www.HomeBuyingInstitute.com.
Source: www.isnare.com
