Purchasing a home or any property would be one of the biggest purchases in life for the majority of people. You will never want any surprising problem compromising the ownership of your home after the deal is completed. In such situations, a policy called title insurance will come to the rescue for both buyers and lenders. Title insurance safeguards the buyers and lenders against any defects associated with a title during the transfer of ownership. In case of any surprising issues creeping up, this title insurance will cover the charges for legal damages, relying on the type of policy. 

About Title Insurance and its working: 

  • The title states the legal right of a buyer to a property that is got by an obligatory recorded paper. Whenever there is a change in property there will be a change in the title as per legal norms. But regardless of the care taken, there may be discrepancies during the chain of transfers or transmissions of the property. This problem present in the title is the biggest issue in the real estate market. Title insurance offers safety against all types of issues, claims, and losses that are caused to the buyer and lender due to the presence of any defects in the title of a property. These issues range from an indefinite time much before the completion of the deal. Hence, title insurance implies that you will be safeguarded from any type of loss that occurred due to a defect in the title of the property. 
  • Most mortgage lenders need homebuyers to buy title insurance, but only lender policy is called lender’s title insurance. As a buyer, to safeguard yourself from paying for losses of title issues, get an option to have owner’s title insurance, that is distinct from the lender’s policy. In case you don’t have owner’s title insurance and if there is an issue at any stage, you may have to pay hefty charges even for legal issues. It may be related to pending property taxes, where the authorities will stamp lien on the home, that can’t be cleared till the taxes are paid. Even though the owner’s policy is generally not mandatory, it’s still a wise plan to get for safeguarding your interests. Even if the seller offers a deed of warranty which is a document that checks the clarity of the, a homeowner’s title policy will act as a safety barrier to pay all the losses in case of any issue. 
  • It is a two-step process to obtain title insurance. It starts with the title company performing a title search to ensure that there is clarity in the title of the particular property. This involves checking the ownership and rights of the person who is selling the property. If there are any clear defects observed, the company will make you aware of them. As the company authorizes a clear title or finds any issues, it starts the insurance process. It involves finding any hidden issues and finally providing a quote for a policy depending on those issues. If in case of multiple defects there are also chances that the company may reject to offer the insurance. 

What does title insurance cover? 

Title insurance will safeguard the lender and the buyer from incurring losses due to defects in a property’s title, as below: 

  • A forged deed or record and other related misdeeds. 
  • Liens initiating from workers who have performed several tasks on the property but not paid completely. 
  • Any kind of encroachments 
  • Disputes related to ownership, like a hidden or unknown heir 

For instance, if you close the deal by buying a home from a deceased person’s property, an unknown heir may come all of a sudden and claim the ownership. The title insurance company would have disclosed this matter during the initial search. If it was not found, then the company will aid you in paying all the costs related to settling the claim of the heir. 

What Could Happen If You Don’t Get Title Insurance? 

  • There are many instances where you could have caught in between the misdeeds. One of the common frauds being a seller looking to sell the property without his ownership rights. Even though you may be careful, title issues are not so easy to be taken lightly. 
  • There are chances that two siblings might have bought the house several years ago but might have stayed away from them till the present day. In such cases, the signature of both the siblings is important to have an authentic transaction without which there will be a discrepancy in the title. 
  • One more case includes where a person might have bought the property from a man where his ex-wife had co-owned the property and has not transferred the documents as needed. There are also chances that the previous owner might have brought the property by looking at a will that might stand expired and the latest one will make the ownership to another person.  
  • There may be filed liens from a group of people against the property with legal claims to be closed the income of the property sale, for settling any debts. These debts may be associated with child support, taxes, and fees related to previous works. These liens will always be linked to the ownership of the property, till there is the completion of a property deal. Issues with the boundaries of the property can also require title insurance claims. 

Final thoughts: 

An owner’s policy of title insurance safeguards the ownership rights of the buyer to the property. Even though the payment for this policy is done only once, its coverage will last until you have ownership of the home. A real estate purchase may be the biggest financial investment most people may make. Hence, as a buyer when you get an owner’s policy of title insurance, chose it from a company such as Utah Title insurance company that is a renowned name in Utah and for providing genuine solutions. 

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