We strongly recommend that every purchaser of a home obtain an owner’s policy of title insurance.
Title insurance is a one-time premium, paid when you purchase your home, and covers you for as long as you own your home and will protect you even after you sell your home if prior defects arise after the sale. Title insurance will also enable a quicker transfer of title when you decide to sell your home, as the new owner has the option of “tacking” to your existing title insurance policy. That means that the title search only has to be conducted back to the date of your policy, rather than a full 30 year search of the public records.
Title insurance is important because it covers any defects affecting your title to your home that may arise after you purchase your home.
In order for a title insurance company to issue a policy of title insurance, our office must conduct a title search of the property you are buying. That search will reveal any judgments, liens, deeds of trust, encumbrances, etc. on the public record against the current owner that must be paid or removed prior to the closing to insure you will have clear title to the home. The title insurance policy issued is based on our attorney’s opinion on title submitted to the title insurance company.
However, in some instances, there may be hidden defects that are not revealed by a search of the public records, such as defects in title caused by clerical errors, incorrect surveys, impersonation, fraud, and forgery, which defects may not arise until after your purchase.
An owner’s title insurance policy will insure defense of the title to your home and payment of all covered claims up to the amount of your title insurance policy, which is normally the amount of your purchase price for the property. It also includes payment of legal fees and expenses, which can be substantial, based on the type of claim.
If you obtain a loan to purchase your property, or if you refinance your property, the lender will require a lender’s title insurance policy also. If you do not obtain an owner’s policy of title insurance, you cannot make a claim under your lender’s policy. The lender’s policy is to protect the lender only.
Please be aware that if you do not have a current survey of the property you are buying, your owner’s title insurance policy WILL NOT cover survey defects, such as boundary lines, encroachments, and easements. That’s why we recommend every purchaser obtain a current survey of the property to be purchased. Our office does not order surveys but we can provide you with a list of local surveyors.