Buying a home is an exciting event. While owning a home is often known as the American dream, it can easily turn into a disaster due to title issues.
Title issues can happen for a variety of reasons. Some common ones include encroachments, property ownership disputes, errors in public records, boundary disputes, forged documents and deeds, and fraud. Liens resulting from debts, such as incomplete contractor payments and unpaid homeowners association dues can also occur.
These issues are all typically covered under title insurance. Title insurance is a form of indemnity insurance that protects property owners and lenders against losses related to defects in a property’s title. These defects could cause a lot of drama and confusion as well as jeopardize ownership rights.
Title insurance is usually purchased during the closing process of a real estate transaction. You pay it as a one-time premium. Title insurance is unique in that it addresses issues related to past events.
There are two main types of title insurance policies:
- Owner’s title insurance. This protects the property buyer and their heirs as long as they own the property. It ensures that the buyer has clear ownership rights and covers legal fees or losses if someone challenges the title. This generally costs several hundred dollars.
- Lender’s title insurance. This type of insurance protects the mortgage lender for the amount of the loan. This policy ensures the lender has a valid and enforceable lien on the property, which remains in effect until the mortgage is paid off. The cost for this ranges from 0.1% to 2% of the home’s purchase price. For a $300,000 home, this can range from $300 to $6,000.
Title Search
When applying for a mortgage loan, most lenders will require you to get a title search before closing on the property. A property title search includes examining public records of your property.
The title company will look for issues such as:
- False signatures or fraudulent claims made against the property
- Clerical errors in the courthouse documents
- Claims for unpaid property taxes
- Claims for those who worked on the property but were never compensated
- Conflicts between former owners over wills
If any issues arise, your title insurance will assist in covering costs to settle the dispute.
Most homeowners do not ever need to use their title insurance. However, buying a home is a costly purchase, so insurance is smart to have it in case any issues arise.
Contact Us Today
Title issues can affect your real estate purchase. Title insurance can give you peace of mind at a low cost.
A Greenville real estate attorney from Blackacre Law, LLC, can help answer your questions about title insurance and buying a home in general. We are focused on making sure our clients are successful in their real estate endeavors. We represent parties in both residential and commercial closings. Call us today for a consultation at (864) 775-5400.