Understanding Title Insurance

In the United States, people find ways to insure nearly everything they can. There’s home insurance, car insurance, health insurance, dental insurance, pet insurance, life insurance, and if you are buying a home, there is title insurance.

Title insurance has been around in the US since the mid 19th century, and is meant to protect against adverse claims or defects in the title of a home, land, or other type of real estate. Historically, it stems from a lack of land record keeping in the United States.

When you purchase property, you expect to have certain rights to that property such as the ability to sell or trade your property as well as to occupy it and use it as you wish. But what if you purchase a title that was forged or lacks an expected easement (right of access) to the property? You could lose a great deal of money if you find yourself on the wrong end of an adverse title claim or defect.

Generally, all institutional mortgage lenders will require you to pay for title insurance, but this will only protect the lender’s interest in the real estate. They are investing a great deal of money to help you purchase the property, and if a legal issue occurs they want to make sure their interests are protected. This policy usually only covers the amount of the loan, not the total value of the real estate.

However, the lender’s policy, which is known as a “loan policy,” does not protect your interest in the property as the actual buyer. For that, you would need to purchase an owner’s title insurance policy. This type of title insurance will ensure that you are protected against monetary loss if an unexpected title issue arises, and that you will be defended (with your defense costs usually paid for) should a lawsuit against your title arise.

Most owner’s policies will cover you against standard potential title problems such as fraud or undisclosed heirs to the title, and you can often expand the coverage to include issues such as if you are forced to remove an improvement to the property due to the lack of a building permit.

Owner’s title insurance policies are a sound investment to ensure that no surprises ever occur with your real estate purchase that could cause you financial loss or to lose your property. The Law Office of Ray Garcia can help you with all your closing needs, and can provide you with title insurance underwriting services through The Attorney’s Title Fund. If you are purchasing property in Florida, please give us a call.