If you are purchasing a condominium, you may have heard the term “title insurance” in conversation with a real estate agent. Title insurance provides protection should any issues with the title arise. Although a title search will be done prior to closing, problems can be uncovered later, heirs to previous owners may come forward, disputes over ownership may arise or title fraud may occur. But how does title insurance work and why is the investment worth considering?
Here is a look at title insurance benefits and what you can expect to pay.
Why You Should Consider Title Insurance
Buying a condo is a big investment—not just in the property itself, but also in terms of your time and energy. Whether this is going to be your home, a vacation spot or a rental, your investment in the condo must be safe and secure.
Title insurance provides protection against problems with your title which is the legal document that identifies what constitutes the actual property and ownership of the property. Any disputes over ownership of the property can create problems for you when it comes time to sell or refinance your condo.
Most insurance policies are paid for on a monthly or annual basis and have to be renewed each term. Title insurance for a condo is a one time payment. Once you purchase your policy, you are protected for as long as you own the property. If at any time you own the condo, a problem arises, you are protected.
How Title Insurance Can Help You When Purchasing A Condo
If there have been any issues with the way the title of the condo has been transferred, or if there is any question about who owns any portion of the property, it may be difficult to close on your purchase.
For example, if another person claims any portion of ownership of your condo, they could claim that they are entitled to more than their share of the proceeds from the sale. This could lead to lawsuits and other legal challenges that would make it difficult or impossible for you to sell or refinance the property.
The Types of Title Insurance For A Condo
There are two types of title insurance: one that protects the mortgage lender and another that protects the homeowner. You will likely be required by your lender to purchase a title policy for them and although you pay for this policy, it provides no protection for you. This policy protects the financial interest of the lender only. You will need to purchase a separate policy for your protection.
Title insurance provides protection against disputes regarding property titles. These potential problems may include:
- Title fraud
- Disputes over previous iterations of the deed or title
- Liens for unsettled payments or taxes
- Undisclosed heirs
Mortgage Lender’s Title Insurance
Mortgage lender’s title insurance protects lenders against losses resulting from the possibility that the borrower will not be able to clear the title from disputes on their new property. If you are financing all or part of your purchase, a lender will require this type of insurance as a condition of the loan. This will be paid for by the purchaser, for the lender, at or before closing on your purchase.
Homeowner’s Title Insurance
A homeowner’s title insurance policy insures the owner against defects in the title that were not found during a title search. The policy is paid by the purchaser and covers either the purchaser or his heirs as long as they have an interest in the property. This policy may be purchased at the time of purchasing the lender’s policy or at any time after closing.
How Much Does A Title Insurance Cost
Title insurance cost is certainly a factor when shopping for a policy. It is a relatively easy calculation to make, as you can expect to pay .5% to 1% of the sales price of the property. This may fluctuate some depending on any extra provisions you may add or that a company may upcharge. It is important to fully understand what is and is not covered with the policy you choose. It is important to note that a more expensive policy does not necessarily lead to better coverage.
Other important factors to consider when reviewing title insurance cost is the quality of service and how quickly claims are being processed. Investing in a title insurance agency that lacks in both respects may cost you far more in the event of having to defend your ownership of the property. Using a well established and local title insurance company can help ensure that the company is familiar with the potential problems that are specific to the area.
Ask The Title Insurance Experts To Help Secure Your Condo Investment
If a lender considers title insurance important for protecting their investment, the property owner should cover their interests as well.
The title insurance experts at Mathis Title Company have decades of combined experience in covering condo purchases in Virginia and would be happy to address any questions you may have. From title searches to title insurance policies, Mathis Title Company has you covered. Contact Mathis Title Company to learn more about our services at 703-214-4020 or schedule an appointment with an agent to insure the title to your condo today.