What Is Title Insurance?

“Title” refers to a property’s legal history. It includes all the facts of its ownership and it also proves ownership. Title insurance protects you against loss resulting from problems connected to the title on your property. Sometimes questions arise from weaknesses in the line of ownership such as unpaid taxes or liens that apply to previous owners. Title insurance covers you as the injured party in these or similar scenarios.

Do I have to purchase Title Insurance?

If you secure a mortgage to purchase your property you will be required to purchase the Lender Policy which protects the lender’s interest based on the amount of the loan provided to the buyer. This policy is required by the lender and is to be paid by the borrower. All mortgage lenders require protection for the amount of the loan. 

An Owner Policy, on the other hand, protects the buyer on the entire value of the property as long as you have an interest in the property. It protects your heir’s interest in the property if the property is transferred to them. Although it is not mandated, an Owner Policy is strongly recommended. It is important to know that your Lender Policy does not cover your interest in the title.  To have your investment protected it is important to acquire an Owner Policy.

How will I know if there are problems with my Title?

First you need to have a thorough title search done on the property. You should retain an attorney knowledgeable in real estate transactions to assist you through this process. After the search is completed, a title exam will be done by the attorney to review all the documents located during the search. This exam is necessary to determine the condition of Title and is one of the most important legal aspects in the real estate transaction. If a problem is found in the chain of title your attorney can investigate and rectify the issues found.  For example, if a previous owner did not pay taxes during a particular year, your attorney will make sure there are no taxes owed as of the closing date.

Be prudent when your purchase property, one of the largest investments you may make in your lifetime. Protect your investment with the purchase of an Owner’s Title Insurance Policy.

If you are buying or selling a house, contact a Real Estate Attorney at http://www.lawofficesofjjc.com.

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James J Caruolo Law Offices 33 College Hill Road Warwick, RI 02886 (401) 828-7100