What Is Owner’s Title Insurance and How Can It Help You?
There is a lot of talk in the real estate industry about the meaning and purpose of owner’s title insurance. While many homeowners don’t know that it’s needed, owner’s title is a very important part of the transaction process whenever you sell or buy a new home. Being able to protect your interests as a buyer, it can help you gain an added dose of security, especially when you spend more than $500k on a beautiful new house, and you expect to be considered the sole owner of that property.
Before going into the details of why owner’s title insurance is necessary, it’s important to first understand what it is. Real estate can get pretty complicated pretty fast, and you don’t need a real estate expert to tell you that. As you might already know, there are two main types of title insurance you will need to purchase: lender’s and owner’s title insurance. While the lender’s title insurance is mandatory, it only provides security for the institution that offers the mortgage loan necessary to purchase the home. If you want your title to be protected, you will need owner’s title insurance. Owner’s title insurance is a type of guarantee that ensures you will be protected as the title holder of your newly purchased real estate property. While it only has to be purchased through a one-time fee, it offers the benefit of a complete title search meant to discover any discrepancies – such as outstanding liens or heirs that might come along to claim part (or all) of the property for themselves – or any fraudulent activities that could have been associated with the property title in past transactions. Owner’s title also covers mistakes in examining documents, errors and omissions in deeds, as well as forgery of fake documents that could land you in a lot of trouble later on.
So, now that we covered all these aspects, let’s take a closer look at exactly why owner’s title insurance is so vital whenever you buy a new real estate property. First, examining the reasoning behind the seller of a property paying for the insurance policy (as it is required in some states), it can clearly be seen that the seller will get a better deal if they ensure the payment, instead of asking the buyer to provide it. On the other hand, from the buyer’s perspective, even if no risk seems to exist, you can never be too careful. There have been cases when older homes had liens or forged documents going back decades, and the lack of title insurance meant that the new owner faced court proceedings, or even lost the title entirely, along with the amount of the mortgage. So, unless you want to endure financial or legal problems of a huge magnitude, it is typically recommended that you decide on a good owner’s title insurance policy.
With owner’s title insurance, the process will go smoothly, and the transaction will be completed with great ease. Even though there is no 100% guarantee that all problems and forged documents will be discovered during the title search, or that the discrepancies discovered can actually be fixed, owner’s title gives buyers a fighting chance. At the very least, it can inform you of any potential difficulties in time to back out of a real estate deal that could be more trouble than it’s worth. Additionally, in the case of newer homes that haven’t had too many owners in the past few decades, it can provide almost certain assurance that no problems will exist. As a result, owner’s title insurance is one of the most advantageous and important deals you can make while seeking to close a real estate deal.