If you\u2019re about to purchase a home, you\u2019ve probably been told to get title insurance. But what exactly is title insurance\u2014and do you really need it?<\/p>\n
What is title insurance?<\/span> Title insurance protects you, as the owner of the property \u2013 and your lender, if you have a mortgage \u2013 against any defects in the title to your property, or any contrary claims of ownership that might arise. Before you close on your home, your attorney or settlement agent will complete a title search or title examination on the property. This is an examination of the title records available in the county where the property is located, and it\u2019s done to ensure that you\u2019re getting "clear title" (valid ownership) to the property you\u2019re buying. Title insurance provides coverage for issues or disputes of record which could impact your ownership rights.<\/p>\n What do title searches reveal?<\/span> A title search often reveals liens on a property from prior owners which may include mortgages, unpaid property taxes, judgments, and searches also reveal recorded road or utility easements. The "chain of title" found in the title exam shows all property transfers in the past \u2013 that\u2019s past owners\u2019 names and the dates of transfer of ownership. In communities with homeowners or condominium associations, there are often recorded restrictions that govern your use of the property.<\/p>\n Who is protected by title insurance?<\/span> Lenders require title insurance if you obtain a mortgage when buying property. The lender\u2019s coverage protects their interest, not yours. Experts recommend that buyers obtain an Owner\u2019s Policy as well \u2013 even if they\u2019re paying cash. After all, your home purchase is likely to be the largest financial investment you\u2019ll ever make. So why not protect it?<\/p>\n