Title insurance is one of many costs associated with purchasing a home. When you close on the property, you must show proof of a clear title.
Get the facts about title insurance in South Carolina to prepare for this expense as you shop for local real estate.
Purpose of title insurance
In a real estate context, the word title means your legal right to the home and property that you own. If a third party has a claim to the property, such as with a tax lien, you do not have a clear title. Title insurance pays the cost of title issues that arise after closing.
Without this type of policy, you will have to cover the cost of resolving outstanding ownership claims. Examples of such title defects include:
- Claims by unidentified heirs of previous owners
- Encroachment on the property by a third party such as a neighbor
- Fraudulent documents or deeds
- Liens resulting from unpaid taxes, contracting services or association dues
The purchasing process
Most mortgage lenders require title insurance as a condition of your loan. This coverage ensures they will be able to claim the property if the buyer defaults on the loan, without losing the investment to an outside claim.
Unlike insurance policies that require a monthly premium payment, title insurance carries a one-time fee that the lender adds to your closing costs. The price of the policy varies based on existing title defects to resolve before closing and the likelihood of future issues or claims.
Most title policies only pay lender costs associated with a title issue or defect. You can also buy add-on coverage for your own protection, however.