Simply put, title insurance protects you against covered title defects. Title defects can include, but are not limited to: liens against the property, undisclosed heirs to a property, improper execution of closing documents, or improper recording of documents after closing. Title defects are found in 25% of real estate transactions.
There are two separate types of title insurance policies; a lender’s policy and an owner’s policy. A lender’s policy of title insurance is required by your mortgage lender (if you are working with one). This policy only protects the lender’s interest in the property, and protects against title defects that could affect the lien of the mortgage. This policy only lasts for the life of the loan.
An owner’s policy of title insurance is optional, but strongly recommended. This policy protects your interest in the property, and protects against title defects that could affect your ownership rights. This policy lasts for as long as you, or your heirs, own the property. This policy covers attorney fees, court expenses, and pays any loss caused by the defects.
Title insurance is a one-time payment, and the price is dependent on the sale price of the property you purchase.
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