The title of your home is one document that you may just gloss over while you work on all of the other aspects of a purchase, from the mortgage to the seemingly endless number of forms you must sign. However, you may encounter problems with the property’s title at any time—even long after purchase.
This is why title insurance is an important part of buying a home or plot of land, even if such insurance is not required as an element of the transaction. Many families have found themselves displaced and at risk of losing their significant financial investment due to title issues that slipped by during closing.
The Most Common Types of Title Issues
A title tracks a home’s history, from who it has been sold to and when to whether any debt is outstanding against the property. However, issues can arise if there has been an error in documentation along the way—most commonly by means of omitting an important detail. The most frequent title issues that people tend to encounter are liens, back taxes and will conflicts.
If your home has a lien on it, that means that it is being used as collateral to satisfy a loan; if that loan is not repaid, the home can be seized. Back taxes indicate that the previous owners did not fully pay their property taxes. Will issues include problems such as a home being granted to an heir in a will or an heir arising who was previously unknown or unlocated.
How Title Insurance Protects the Buyer
The goal of title insurance is to protect a buyer against issues that arise with the title at any time after the policy goes into effect. If you purchase a home, live in it for a few years, and then discover that the property still has a lien on it, the responsibility for repaying that lien falls on the current owner. In this way, you can become financially liable for what happened to the property before you purchased it.
If the home was, for example, given to an heir in a will, you may be forced to vacate the home even though you currently live in it. Title insurance offers protection against these circumstances. If you must go to court to legally contest a title issue, your title insurance policy will help you to cover these costs.
Mortgage lenders will typically always secure their own title insurance (which the buyer commonly pays for) because they are aware that this small expense will protect their own investment. However, the title insurance that a buyer purchases to protect the mortgage lender does not protect them; they will need their own policy.
Acquiring Title Insurance as Part of the Closing Process
Title insurance functions slightly differently than most other types of insurance that you may have encountered before. You can purchase title insurance at any time, but the best time is as you conclude the home buying process.
Unlike most other types of insurance that collect a premium that is paid monthly, you will pay only one time for title insurance: as a lump sum at closing. After you have made this purchase, you are protected from title issues going forward.
Rely on an Expert Title Company to Answer Your Questions
Whether you are considering if title insurance is right for your situation or you are looking for a title insurance provider that you can trust, Mathis Title Company would be happy to help. You have a lot to think about during the home buying process, and we can relieve some of the burden associated with the property’s title.
We provide guidance on the wide variety of title issues that can arise during and after a home purchase, and our experienced team of professionals has years of experience in the field. Reach out to schedule an appointment to discuss which type of title search is the right fit for you, how insurance can protect your investment and how to get started.