Title Insurance is a standard policy to protect you from taking title to a property with unseen defects.
For example, if your property is adjacent to a major road and you are not aware of this fact and you submit an application to build a home on that property you have a risk of losing your investment in the event that the road is being widened and your property is taken. This hazard is covered by Title Insurance. Another example would be if your property is being used for some purpose other than it appears on the grant deed you will need to have a survey performed and you will need Title Insurance to cover the cost of that survey and assure where your property ends and where someone else’s begins.
What Title Insurance Protects Against?
It protects against the loss of money in the event of loss of property. The loss of property can be your personal property or your land. It also protects against the loss of money and time if the problems on the property are not discovered until after the transaction has closed.
Title Insurance is Not Just For Purchase of Land
Title Insurance is an important part of each and every real estate transaction, regardless of whether a building is involved. Title Insurance also protects against loss due to defects in title which adverse possession may create. Adverse possession is a legal process whereby title to land can be taken by another through the open and continual use of the land. If title to real estate is taken through adverse possession, the title insurance policy would cover the full amount of the original title to the property.
You, as the purchaser, are entitled to rely upon the fact that searches have been made of public records, that there is no adverse claim to the title. Property boundaries are often the source of most title problems and are very difficult to check due to the difficulties in getting access to the boundary lines. Title Insurance protects you from:
- Mislead by sellers. They assume that the title is good and convey a clear title of the property to the buyer, but the title to the property may not be in order.
- Transferring through fraud. One party to a real property transaction may commit fraud or misrepresentation that may affect the title to real property.
- Alterating or destroying the record. Once a title search has been performed, the Title Insurance company will require that the title be recorded in the county records. If these records are later destroyed, Title Insurance would cover the cost of re-creating the original records.
- Title problems after the sale. Some legal difficulties may arise after the transaction has closed. The Title Insurance can be used to defend or initiate lawsuits and to fully compensate you for the cost of any loss that would have occurred.
Costs aside, it is important to have your transaction protected. The minimum amount of title coverage you need is dependent on the situation and the amount of the purchase price. To assist you, you can take advice from a title insurance expert. Title insurance expert, being a professional in the field, would be able to help you choose the appropriate policy you need for your property.