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Should you purchase an owner’s title insurance policy

On Behalf of | Feb 1, 2022 | real estate law

If you are purchasing real estate, you have an option to purchase title insurance as part of the closing package. Your lender typically requires that you buy a lender’s title policy. A lender’s policy does not protect the rights of the owner.

Title insurance requires a lump-sum payment at the property closing. An owner’s policy stays in effect during the duration of your ownership of the property.

Protect against title disputes

Your real estate purchase is a significant investment. You want to ensure you have protection if some problem arises with the title after your purchase. An owner’s title policy usually provides you indemnification against legal costs associated with title litigation. The title to your property may come under challenge for various reasons, including forged documents, impersonation of the record owner, improperly executed deeds or probate mistakes.

Shield from undiscovered liens

An owner’s title insurance policy compensates the policyholder for damages related to any undisclosed liens. The title company searches the property records for any liens during the closing process. However, the company can make an error in finding all the encumbrances.

Obtain proper coverage

Title insurance provides security for the equity in your real estate. Generally, you should obtain a policy that covers the total amount of the property’s sales price. You can add clauses that increase the coverage amount as the value of the property increases.

You might be reluctant to purchase an owner’s title insurance policy due to the cost. However, the policy provides valuable benefits and peace of mind.