If you have never bought a house before, you probably haven’t heard of title insurance. A property deed or title has to be “clear,” or “free of defects,” that could cause the sale to be invalid or illegal. Title searches are done to try to ensure that there are no holds barring the owner from selling the property. Still, some title problems don’t come up until after the sale. This is what title insurance is meant to cover.
Title defects can vary, but the most common include:
- Additional owners or stakeholders who have not signed off on the sale
- Federal, state, or county tax liens, including income and property taxes
- Liens from debt collection judgements
There could be other issues that might arise with a title as well. If a sale goes through and you later discover that it was invalid for one of these reasons, you could have unplanned expenses such as moving, finding another place to live, new down payments, etc. Title insurance protects you by covering these costs.
But who is responsible for title insurance? As you might assume, since title insurance protects the borrower against financial losses due to title defects, it is that individual who is responsible for getting title insurance. However, it is important to note that most lenders also require a title insurance policy, which must be separate from your personal policy and meet certain requirements.
Unless you are working with an experienced real estate agent, you’ll need special assistance to navigate the murky waters of title searches and title insurance policies. We are here to answer all of your questions, handle closing activities, and meet all title or deed requirements for a legal sale. Contact us today to learn more.