Title Insurance: What it is and Why You Need It

Title Insurance: What it is and Why You Need ItReal estate may be one of the largest financial investments you make in your lifetime. It is vital to know how to protect yourself throughout the purchasing and financing process. Title insurance is one way you can make sure that you don’t lose out if you run into any snags regarding title or ownership of your new property. Experienced real estate lawyers assist you with your transaction to ensure it runs smoothly from beginning to end.

What is Title Insurance?

Title insurance protects a policyholder if there are inconsistencies or issues with the title for a property. Title insurance covers both known and unknown discrepancies in the full history of ownership of the property. There are two kinds of title insurance—an Owner’s Policy, which protects the buyer, and a Loan Policy, which compensates the lender should issues with the title arise. Most lenders require that title insurance is included in a buyer’s mortgage closing costs. Typically, the mortgage lender’s Loan Policy does not safeguard the buyer. Although Owner’s title insurance is often optional, it is well worth the cost of protecting your rights and interests

Why Do You Need Title Insurance?

Title insurance protects both the owner and lender in the event that something goes wrong and issues of ownership arise. The recorder of deeds in most municipalities does not guarantee 100 percent accuracy in its record-keeping. Although most title searches are accurate, there are some risks of title issues such as filing errors, forgeries or undisclosed heirs. Although it is a rare occurrence, someone with an older document that shows ownership could try and claim your property, which can cause stress and lead to costly litigation.

An Owner’s Policy is usually equal to the amount of the purchase price. This policy is valid for the duration of time the owner or their heirs hold a stake in the home or commercial property. In addition to mitigating risk before a transaction is finalized, an Owner’s Policy pays valid claims and attorney fees if someone disputes the accuracy of the title after the property is purchased. A Loan Policy serves as a safeguard for a lender’s financial interest in the property. It is typically issued in the amount of the loan. Liability diminishes as the mortgage is paid down.

How Do You Choose Title Insurance?

Real estate lawyers in PA have relationships with local title search and title insurance companies. They can help you find affordable title insurance and handle all aspects of your transaction. Your attorney will also draft and review contracts, handle negotiations, prepare the deed and accompany you to the closing. Seeking the counsel of an experienced attorney and being proactive about protecting your rights and securing your title can help you avoid costly court battles and give you peace of mind.

Our knowledgeable West Chester real estate lawyers at Carosella & Associates can help you avoid any title issues that arise and assist you through the real estate transaction process every step of the way.