What Is Title Insurance?

Title insurance. Insurance that covers both the buyer and lenders in case there is a financial loss due to a skip of ownership in the title report. This is needed when checking out loans to finance or refinance a home.

Title. Public record that keeps track of ownership on the property. The public record is usually through the Assessor’s Office website where there is a page that shows the ownerships and the time each ownership took place. There is also a list of buyers and sellers attached to the title report. At times, ownership could have been transferred, yet, unregistered or undocumented. This is defined as defect. There is also the Owner’s insurance policy that is paid for by the owner to protect the buyer in home-buying.

What does title insurance mean for you? Let say a couple bought a house together with joint ownership of 50/50. They later got divorced and the husband got the property all to himself. However, he did not process the transfer to completely register himself as a sole owner. You bought the house from the husband and the wife later come and claim ownership of the house because her name is still on the registration. Or there is an heir to come by and claim the inheritance. Title insurance and Owner’s insurance would help to protect or compensate the loss in this case.

Also apply to unforeseen circumstances. The title insurance would cover the boundaries of the property only. Thus, there is no fear for “encroachment”.

Rule of thumb. Aside from the security of the title insurance, always check the title (i.e. ownership history) on the property before making the down payment. Also ask lots of questions to the owner(s), the realtor, and even neighbors to find out if there’s anyone who is not listed on the title report that is still entitled to a share of the property.

Topics: real estate, title insurance, insurance

Work cited: Realty Times; https://realtytimes.com/mortgage-advices/item/1039262-title-insurance-explained?rtmpage=