One of the most crucial documents when buying property is the title. It serves as proof of ownership, legally establishing the owner’s right to utilize, control, possess and resell the property. However, some owners find themselves in challenging positions when they discover title defects long after finalizing the purchase.
They could have checked through a title search before closing the deal. Still, these services might not reveal hidden issues, including easements, unpaid taxes, filed liens or claims by a previously unknown heir to the property.
Due to these risks, owners could get title insurance coverage for protection. Title insurance uses searches to establish the owner’s claim and rights to their property. If a title defect arises, the insurance underwriter could support the title and cover the expenses related to the issue, including losses of the property’s value.
The maximum amount it could cover depends on the policy. Typically, the limit is equal to the property’s sale price. Additionally, title insurance could vary based on who is purchasing, whether the lender or owner. A lender’s policy is usually a condition for the mortgage loan, protecting the lender’s interest. Meanwhile, the owner’s policy covers the new owner from actions or inactions of previous property owners.
Title insurance could have no time limit on its effectiveness. It could stay in effect if the policyholder owns the property associated with the insured title.
Resolving title defects can be expensive
Unfortunately, the grueling process of resolving title defects could be unpredictable. They could lead to high costs and lengthy procedures. Title insurance could take care of these concerns. Having coverage could provide peace of mind knowing that a professional could address concealed title defects and that the policy will cover the accompanying expenses. This insurance type might be optional depending on the circumstances, but it could save a lot of trouble in the future.