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Title Insurance
By Matt Unangst, 23 Jan 15:58
• Protects owners and lenders from ownership disputes
• Two types: owner’s and lender’s
• Most lenders require lender’s title insurance
• Rules on who pays title insurance vary from county to county
• Rates vary – do some comparison shopping
• Many title companies offer discounts for various reasons
Disputes sometimes arise over property ownership. These disputes range from government liens against the property to outright fraud. To protect yourself against any disputes over your property, it is important to acquire a title insurance policy. Title insurance insures your ownership of the property and protects that ownership and your financial interest in the property from attack.
The insurance that the property owner possesses is not the only kind of title insurance. There is also title insurance for lenders. Owner’s title insurance not only insures the ownership of the property, it also covers any legal fees necessary to defend that ownership from attack. Lender’s insurance covers the loan that the lender has issued for the property. A majority of lenders require lender’s title insurance before they will issue a loan.
The cost of owner’s title insurance is based upon the price of the property; lender’s insurance upon the amount of the loan. Both are issued when the property is purchased for a one-time premium, which, in the case of owner’s insurance, covers you and your heirs as long as you possess the property. Lender’s insurance lasts only until the mortgage for which the policy is issued has been paid.
There are a number of possible threats to your property title. Among these are the liens and fraud discussed earlier, inaccurate or conflicting wills from a past owner, missing heirs that appear out of the blue, and misfiled deeds. The title company seeks to find all possible problems before you take ownership of the property so that they can be cleared up before affecting your ownership.
Remarkably, there is no standard for who pays the title insurance premium. Each county has its own rules for whether the buyer or the seller is responsible for acquiring title insurance.
Title insurance costs can vary quite a bit. Before choosing a title company, do some comparison shopping to find the best offer. Some title companies offer special deals that include other types of insurance or other services for a lower cost than buying them separately. Others offer special rates for homes that were just recently sold, senior citizens, teachers, veterans, government employees, first-time home buyers, and more. The type and age of a home can affect insurance rates. Often available as well are special lender’s insurance rates for refinancing a home.
Some important things to keep in mind:
Don’t, however, just buy the cheapest policy without first examining carefully. Not every policy offers the same aspects of coverage, so make sure you are getting what you want. Make sure that your policy is for the amount that you want and that coverage begins the day you take ownership of the property. The policy should also describe the entire property being purchased in order to protect all your rights. Your policy should also cover any claims by contractors if the home was recently built or remodeled.
KEYWORDS: title insurance, title company, insurance, title policy, lender’s insurance, owner’s insurance, buying a home, refinancing a home, insurance premium
SEE ALSO: Title Insurance: Where Does Your Dollar Go?, The History of Title Insurance in California, Insuring Home Ownership, About Homeowner’s Insurance, Common Ways of Holding Title
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