Protecting Your Home with Title Insurance

The biggest investment you will make in your lifetime will probably be purchasing a home. So before you sign on the dotted line, you want to be sure that the "title" of the property is free of any other claims.

A title company ensures that your new property doesn't carry encumbrances and other legal obstacles.

For a modest, one-time title insurance premium, you will receive continuous title insurance protection equal to the purchase price of the property or its current market value.

The title insurance company searches the property's title history. The title company can usually find any title problems that may arise and clear up these problems prior to closing.

Because Real Estate Law is so complicated, you need an expert to make sure that all previous transactions have been correct, so you don't end up with legal problems or a problem with the title to your property. Your title insurance owner's policy will describe the property and outline any recorded limitations on your ownership. It will also set forth the title insurance company's responsibilities should any claim covered by the policy terms arise. Typically your title insurance will protect you in the following cases:

• Contested title — Someone, usually a previous owner or occupant, claims they still own the property or have not given up their claim. In this case, the title company will defend your title at no expense to you.
• Defective title — "Defective title" covers any number of problems with the title to your home. It can even include a "contested title". Other examples of title defects include problems with legal access to the property, easements that make the property less usable, unusable, or unsaleable. Many other complicated problems define "Defective title." The title company will find these title problems, or should they miss them, protect you from financial loss - up to the amount of the policy.