If you have ever purchased a home or are in the process of buying a home, you've probably seen "Title Insurance" mentioned a time or two as part of the process. Title insurance at its core protects the lender and you, the buyer, from any risks or losses by faults from an event(s) that occurred before you owned the property.
There are two forms of title insurance: The lender's policy and the homeowner's policy.
The lender's policy protects the mortgage holder from faults in the title that results in a loss. The homeowner's policy protects you, the buyer, against damage that may occur from your ownership of the property.
Homeowner's Policy Protections
A homeowner's title policy:
Protects you from financial loss due to demands that may be charged against the title of your home.
Pays legal costs if the title company has to defend the title against a covered claim.
Provides the payment of successful claims against the title of your home that is covered by the policy.
Items Protected Under a Title Policy
A title policy protects the homeowner from:
False impersonation of the valid owner of the property by the seller or other persons previously in the title.
Title insurance protects from forged deeds, releases, and other documents associated with the sale or transfer of the home.
It protects the homeowner from deeds by people that are of unsound mind.
It protects against deeds by minors.
Invalid documents that were completed by an expired power of attorney.
Invalid deeds that are delivered after the death of the grantor.
Deeds by single persons who are, in reality, married.
Claims for unpaid estate inheritances and gift taxes against prior owners of your home.
Unrecorded easements that give one party the right to enter another party's property.
It protects against any claims arising from undisclosed descendants of the former owners of your home or the land on which it is situated.
Title Insurance varies in price. Talk to your REALTOR® or lender if you have any questions about Title Insurance or need recommendations for a good title company to use.