If you have never bought a home you probably don’t know what this is….even if you have bought a home, you may not know what it is. You have seen it on the closing statement and that it costs you money, but what exactly is title insurance? Getting a clean title to that piece of property that you just bought is the reason you went to a title company in the first place. Shouldn’t the fact that the attorney performed a title search be enough?
First, there are two types of title insurance; lenders title insurance and owners title insurance. If you are getting a mortgage on the home, your lender will require title insurance to protect their investment of the loan. You will have to buy that, like it or not. Owners title insurance is probably optional, however, it will protect you if a title problem comes up down the road.
Title insurance starts with the title search, usually an attorney that specializes in title research, will search through historical records looking for people that may lay a claim to your property. MOST of the time the title is clear, meaning there are no problems with someone claiming ownership of partial ownership other than yourself. However, there may be a cloud on the title. This can be a mechanic’s lien where there was work done that did not get paid, an improperly executed will, or an estranged spouse that claims part ownership. A cloud on a title can prevent you from selling the property.
By purchasing owner’s title insurance, it could help you in a couple of ways; First, by having a thorough title search required by the underwriters will ensure that you can purchase the property with the knowledge that the title is free and clear of issues that could create a difficult situation later. Second, the insurance itself will make it right if there is a cloud discovered on the title later by a different title search.
Should you purchase owner’s title insurance? That is a question only you can answer, how much is the peace of mind of knowing that you can not be dragged into court later on to settle if you legally own the property worth to you?

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