Title Opinions & Insurance
When dealing with Real Estate, nine times out ten, only a title insurance policy will assist you in your time of need. An owner’s title insurance policy is your insurance against adverse claims by prior owners or those claiming through a prior owner or errors in records. Title insurance for property owners, called an Owner’s Policy, is usually issued in the amount of the real estate purchase. It is purchased for a one-time fee at closing and is valid for as long as the owner or his heirs have an interest in the property. Only an Owner’s Policy can protect the buyer should a covered title problem arise that was not found during the title search. Possible hidden title problems can include: errors or omissions in deeds; mistakes in examining records; forgery; or undisclosed heirs.
If you are obtaining a loan from your bank to purchase your new property, your Lender will require you to purchase title insurance to protect the Lender which is called a Loan Policy. The Loan Policy is usually based on the dollar amount of the loan and it protects the lender’s interests in the property should a problem with the title arise. It does not protect the buyer. The policy amount decreases each year and eventually disappears as the loan is paid off.
You may ask why a title insurance policy is necessary when a title search will be done. The answer is simple. A search cannot uncover every potential mistake in title. For instance, let’s assume you just purchased your dream home and are settling in when one day a lovely lady rings the door bell. When you answer you learn that she was once an owner to the property and has been going through a terrible divorce. She explains to you that her husband forged her signature to the Deed which deeded the property to you and that she still legally owns the property – and she wants you, out. After many months in court, she proves her story true. She gets the house back – and you are evicted. Meanwhile the husband has absconded with all of your money! Or perhaps instead of a recent divorce’, the person knocking on the door is the unknown heir to the estate of seller who was not informed by his siblings of his father’s death. Have we convinced you yet?
Another common question is why a title insurance policy is necessary when the home you are buying is new construction or has only ever had one owner. But don’t forget, while the house may be new, the land most certainly is not. And when it comes to title, it is the land that matters, not the building. So in short, regardless of the circumstances, GSLG recommends you purchase an owner’s title insurance policy to protect the largest investment you will likely ever make.