What Is Title Insurance And Why Do I Need It

What Is Title Insurance And Why Do I Need It

What is title insurance and why do you need it?

The title to a property is the owner's guarantee that they are in lawful possession of the property.  Title insurance insures you against claims made against you or your property in the event that they did not have "clear" title.  There are two types of title insurance, owners title insurance and lenders title insurance.  Lenders title insurance protects the lender in the event that a claim is brought against the title of their collateral (the home) for the loan. 


So for example, lets say that there's a married couple going through a divorce.  Mrs. Smith decides to sell their house and forges her husbands signature by doing a mail out closing and "colluding" with a notary who notarizes the documents falsely.  Mrs. Smith sells the house to Mr. and Mrs. Ryans.  Mr. and Mrs. Ryans in turn sell the home to you.  Mr. Smith is out of the country for work and comes home to find his home gone and no proceeds for the sale.  He files a lawsuit.  What is there to protect you?  Your title insurance! 


This may seem like a far fetched scenario but lots of different situations come up in which you would need title insurance, what if you buy a foreclosure and the home was foreclosured on improperly?  What if title was transferred and there was an outstanding lien that wasn't paid?  A lien filed against the property is using the property as collateral.  Is it fair that the lienholder no longer has collateral just because title was transferred inappropriately? The title company will do a title search to try and locate any issues but in case something unexpected happens, you'll be protected.



It's the only insurance that protects you from past events rather than future occurences. 


Sarah Rowan Headshot
Author:
Phone: 970-397-5774
Dated: November 17th 2014
Views: 319
About Sarah: Sarah was a licensed real estate agent for 10 years before transitioning into the mortgage industry ...

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