Obtaining the title is one of the crucial steps in the process of buying a home. It’s a legal entity that guarantees your ownership rights for the property transferred from the respective seller. But imagine if there are any issues in the deal or to the title itself that can cost you more than the actual buying price. In such situations, insurance can be your savior. It’s the title insurance that is a policy that will safeguard the homebuyers and also mortgage lenders from financial losses occurring due to issues with the title. If you are a homebuyer, keep reading the article to know the importance of title insurance.
How Does Title Insurance Work?
For most of them, buying a property would be the highest investment in their life. The worst thing you wouldn’t want is to know that the title rights to your property are invalid after the deal closure. Hence, you would require the aid of title insurance to safeguard you from such unforeseen situations.
There are two types of insurance: lenders’ title insurance for the mortgage lender and owners’ title insurance for the buyer. A title insurance company begins by searching the title details to assure if they can offer you title insurance. If you partner with a reliable title insurance company, then it’s unlikely that you may not face any issues, but in case of any problem, it will be taken care of completely. After their detailed title search, title insurance companies will decide on providing the title insurance policy to safeguard against any title defects that will lead to serious financial losses. The title company will perform public record searches concerning your home to find any title defects that may impact buyers’ and mortgage lenders’ interests, as listed below.
• Liens that may be applied to the property via taxing authority, vendor, or contractor who hasn’t got received his outstanding payment. As the current owner, you will be liable to pay the amount for which the previous owner holds the responsibility.
• Some other party may have the right to use a part of your property even though you are the current owner. This easement could restrict your ability to utilize the property as you wish.
• There could be certain zoning norms and limited agreements levied by the respective homeowner associations.
• Fraud signatures in the public records impact the chain of titles.
• The title rights can be impacted via sale deeds, court judgments, mortgages, child support guidelines, divorce declarations, and similar legal orders.
If any problems are revealed via title search, then the title insurance company will look for a resolution. Sometimes, these problems will be revealed to the seller to make them resolve before the deal closure. But, if the problems are not in a position to be resolved easily, then the title insurance company may refrain from offering you the title insurance. This will be a caution for you to rethink the property before the final closures.
Why is title insurance highly essential for the home buyer?
• If you are getting a loan for your property purchase, then your mortgage lender will need you to buy a lender’s title insurance to safeguard their interests. Being a buyer, you will be responsible for paying the amount to the policy for [protecting the mortgage amount if there are any issues related to the title after the deal is completed. But the owner’s title insurance (also called buyers title insurance) is not mandatory for the deal, which makes you responsible for getting it before the deal is completed.
• An important thing to note as a buyer is that lenders’ title insurance will not safeguard the owner of the title. Hence, you will need owner’s title insurance which is separate from other policies, to go a long way in safeguarding your interests. Despite detailed public record searches, there are chances of any hidden issues related to the title that may arise in the later stages. If you don’t have title insurance, then the complete financial load will stay on you as the current homeowner.
• You may have purchased different types of insurance for safeguarding the structure, dwellers, and other materials on your property. None of these insurances will safeguard you against the legal issues related to the title except the owner’s title insurance. Your real estate agent may assure you of transparency in the title, even in the public records, but there are several instances where hidden issues that arise after several years. Irrespective of the type of issues that may emerge, safeguarding the claim to ownership is key for a secured living.
• Title insurance safeguards the homeowner until they hold the ownership rights to that property. If you think about buying this homebuyer’s title insurance, then you may end up in a horrible situation. If there are any rising hidden issues, then the costs to compensate it could be even more than the actual deal itself. Moreover, you may also end up in a situation of facing legal charges or paying the fees to fight the case.
• The title insurance costs vary across states, but this one-time purchase amount is minimal when related to the protection it provides to the buyers. Get peace of mind knowing that your lifetime investment is safe against any pending liens, ownership claims, or any other issues related to the title caused by previous owners.
Title insurance is among the mandatory processes to be taken before completing the home purchase deal. While you may think that claiming the coverage is low, the circumstances to be faced on losing a title are much higher than this minimal insurance amount. Title insurance protects against unpredictable situations to give peace of mind to lifetime investing homebuyers. Always associate with a trusted name like Utah Title insurance company, Utah, which holds an expert group of professionals providing exclusive title insurance service to safeguard your property.