When you purchase real estate, whether commercial or residential, you will receive the title to the property. This document establishes you as the legal owner of the property and gives you the right to sell and complete other ownership tasks.
Title insurance protects the investment you put into your real estate purchase. According to Forbes, this type of insurance provides coverage from any claims made by a third party that did not show up during the original title search.
Why you need title insurance
If you purchase real estate and there is an issue with the title later on, there is no guarantee you will be able to maintain your ownership. By purchasing title insurance, the title company will protect your interests if a defect surfaces or a covered issue arises once you finalize the sale of the real estate.
What title insurance usually covers
Title issues can arise even after a diligent search of public records. Common title issues include the improper execution of documents, mistakes when recording legal documents, undisclosed or missing heirs, unpaid judgments, unpaid assessments, impersonation of the true owners of the property and other problems. In some cases, these issues can arise months or even years after you take over ownership of the property.
You should purchase title insurance on the real estate you intend to buy before you finalize the purchase on your closing date. This should be a standard aspect of the purchasing process, especially if you purchase multiple properties for investment purposes.