Each year, approximately 20% of homebuyers nationally fail to protect themselves by not getting owner’s title insurance. Unfortunately, this leaves them exposed to serious financial risk—causing endless worry and regret.
If you’re thinking of buying a home, here’s what you need to know to protect yourself and your property rights, so you can rest assured once you’ve purchased your home.
Looking For Potential Threats
During the home-closing process, your title professional will help transition the home from the seller to you, the homebuyer, by examining public records and protecting against fraud and forgery. Generally, if a problem is discovered, the title professional works to resolve them before you purchase the home.
However, even after a title search is performed and you purchase your home, problems could arise that threaten your ownership rights. Examples include:
- Undiscovered tax liens
- Forged signatures in the chain of title
- Recording errors
- Undisclosed easements
- Title claims by missing heirs or ex-spouses
Getting owner’s title insurance protects your property rights from threats like these. Here’s a real-life example of how it works.
A Long Island family bought their first home for $500,000. At closing, the seller’s credit-line mortgage in the amount of about $200,000 was completely paid off. The transaction closed and the buyers happily accepted the keys to their beautiful new home.
A couple of weeks later, the Long Island family received a notice of delinquency on the seller’s credit-line mortgage of about $200,000. Unknown to the buyers and the title company, the seller had two separate mortgages for similar amounts with the same lender. One was recorded, the other was not. Unfortunately, the payment presented at closing and processed by the lender was for the unrecorded credit line. The seller did not disclose the unrecorded credit line.
Thankfully, the buyers had title insurance and called the claims number provided. Within a couple of weeks, the title company paid off the recorded credit line and went on to chase the “bad guys,” AKA the sellers. The Long Island Family kept their home – and their peace of mind.
There are two types of title insurance: lender’s title insurance and owner’s title insurance.
Lender’s title insurance is required by most lenders and banks because it protects their loan investments. Usually, you purchase this policy as the homebuyer. If you only have a lender’s policy, where the outstanding loan is covered, your equity is not protected. Therefore, you could have your property rights taken away if someone else has claim to your home.
Owner’s title insurance is the policy that protects your property rights from legal and financial threats like those mentioned in the story you just read. That’s why millions of homebuyers each year make the smart decision to get owner’s title insurance. It’s a low, one-time fee that provides the peace of mind that every homebuyer deserves, for as long as you or your family own your home. In many areas, the seller purchases the policy for you. Ask your title professional how it’s handled in your area.
Support and Free Information
To buy your home with confidence, you need to work with a trusted title professional. They’re the experts who will help you throughout the home closing process. They will also advise you on how to protect your property rights and avoid costly problems by getting owner’s title insurance.
For more information, ask an ALTA member or visit www.homeclosing101.org.
*This advertising offers a brief description of insurance coverages, products and services and is meant for informational purposes only. Actual coverages may vary by state, company or locality. You may not be eligible for all of the insurance products, coverages or services described in this advertising. For exact terms, conditions, exclusions, and limitations, please contact a title insurance company authorized to do business in your location.