Updated: Mar 4
Title insurance is one of those phrases that you will likely hear throughout the home buying process - especially as your closing date approaches. And you are sure to see a title insurance policy buried in the mound of paperwork you need to sign to make that transaction official.
But, what is title insurance - and is it even necessary?
What is Title Insurance?
Title insurance is protection for your investment. It ensures that you are buying a property with a free and clear title - and, if anything proves otherwise, you don’t have to worry. Let’s explain things in a little more detail.
When you buy a piece of property, a title search will be ordered. This is a thorough examination of the deeds and public records concerning the property back to when it was built. Very carefully, everything is reviewed to ensure that nothing is clouding the title. No missed deeds, judgments, tax liens, etc. After all, if there were any of these issues, they would have to be resolved before the closing can take place.
Unlike other insurances, title insurance protects you from things that happened before you took ownership of the property. For instance, if a judgment was missed during the title search, you would be protected from it thanks to your title insurance. Or if a missing heir appears after you’ve already taken ownership, your title insurance would protect your interest in the property - even legal battles, if necessary.
Two Types of Title Insurance
There are two types of title insurance - an owner’s policy and a lender’s policy.
The owner’s policy protects you as the owner of the property. It is not mandatory that you have this title insurance, but it is highly recommended. Any time something arises that threatens your rights to your home, you will be thankful you decided to take that title insurance policy.
The lender’s policy is often mandatory if you are financing. The lender wants to be protected should any title defects appear and they want to remain in first lien holder position. So, at closing, you will be responsible for purchasing this policy.
It is important to note that each of these different types of title insurance only covers what they are protecting. In other words, a lender’s policy will not help you with your own interests in the property just as an owner’s policy does nothing to protect the lender.
Why You Need Title Insurance
Many different defects can appear after a title search has been done and the closing has already taken place. As you are the new owner of the property, any issues that come up leave you responsible.
What type of defects are possible? Here are a few of the most common:
Fraudulent or forged documents
Encroachments and easements
Many people buy and sell property every single day. And many of them go on to never have an issue. Many others get nice and cozy in their new home only to get a knock on the door of someone claiming to hold the deed to the property.
Whether you have an owner’s policy will determine what happens next. Will you be protected by title insurance? Or will you be left fighting it out on your own?
Title Insurance at Bulldog Title
At Bulldog Title, we never want to see any of our customers be left unprotected due to lack of title insurance. Your new home may be one of the biggest investments you will ever take, but your title insurance policy may be the smartest.
Contact our office today at 318-361-0061 to learn more.