My clients often ask, “What is real estate title insurance and why do I need it?”

Although title insurance is a one time expense, if you’re a first time home buyer it can be difficult to come up with such a large sum of money. Title insurance can easily run into thousands of dollars on a home purchase. Unlike some other types of insurance, title insurance does not carry with it additional monthly premiums. This kind of insurance is a one time expense covering the owner until the property is sold.

real estate title insuranceReal Estate title insurance is a type of insurance that covers financial loss from defects in title to real property and from the invalidity of mortgage liens. It is NOT required to purchase a home.

A title policy is put in place to protect an owner’s or lender’s financial interest in a property against loss due to title defects, liens or other matters. The insurance will defend against a lawsuit attacking the title as it is insured, or pay back the insured for the monetary loss incurred, up to the  amount of insurance provided for in the policy.

Home buyers have the opportunity to get a substantial discount when they purchase both a lender’s and owner’s policy at the closing table. This is called a simultaneous issuance, which is basically a one time premium paid at closing and lasts the entire time of the property ownership. Like any other type of insurance, not having title insurance when you really need it can be devastating financially.

Common Reasons For Title Insurance Claims

Examples of some of the more common reasons for claims against a Real Estate title insurance policy are as follows:

  • Impersonating fraudulently the true owner of the property
  • Forgery of the deed, releases, or wills
  • Real Estate fraud
  • Undisclosed or missing heirs to the property
  • Any Instruments executed under invalid or expired power of attorney
  • Mistakes when legal documents were recorded
  • Deeds by someone not of sound mind
  • Deeds by a minor
  • Misinterpretations of wills
  • Deeds with misrepresentation of marital status
  • Liens for unpaid estate, income, inheritance,  or gift taxes

In my opinion, having a real estate title insurance policy is something ever buyer should have. If you don’t have the funds at closing, I would recommend purchasing a title insurance policy as soon as you’re able to.

If you have any questions about real estate title insurance, feel free to contact my office at 702.331.8185.