Purchasing a home is often a tenuous process, and understanding the process from beginning to end is easy with reliable resources and top industry professionals. Today, we would like to share nine reasons why a Buyer should elect to purchase owner’s title insurance.
- Purchasing a home is often the biggest purchase of your life. When you pay the one-time premium for title insurance at closing, you are protecting your home, your family and yourself from any future claims made against that property (unless specifically set forth in the policy as an exclusion). Be it a forgery, lien, unknown heir and more, an owner’s title insurance policy is your guarantee that what’s yours remains yours.
- Acquiring title insurance after the fact is too late. Think of it in terms of your homeowner’s insurance. We hope you never have to utilize that policy regarding an unexpected fire or water damage, but if you do, you’ll be glad you have it. It’s the same with your title insurance. Not needing it is great, but needing it and not having it is a difficult situation…not to mention costly for everyone involved.
- According to Scott Mozingo, branch manager and attorney for Highland Title + Escrow’s Manassas office, the most common claim is an unreleased deed of trust. In this case, the property was sold, and the seller’s loan was paid off, but the bank didn’t record the release for that loan, or it wasn’t recorded correctly at the courthouse. When the buyer sells the house ten years down the road, that previous mortgage remains unreleased in the courthouse record. Using the Buyer’s owner’s title insurance policy acquired years ago at settlement, the underwriter resolves this issue, and the sale moves forward. However, with no title insurance policy, an attorney should be hired to assist with clearing up the unreleased deed of trust, and the cost would be as much, if not more, than the original policy premium.
- If you buy a home that had a repair completed to improve the house but the previous owner didn’t pay the balance to the repair person before they moved, there could be a mechanic’s lien placed on the home. The repair person is granted a timeframe to file the lien so you may have already closed and taken ownership of the property. Whoever holds the deed to the home is responsible for paying that balance. And if you are thinking you would just sue the seller, please think again. That process is long, involved and costly. By purchasing title insurance, the underwriter steps in, pays off the lien and ensures the title is free, clear and yours.
- Title insurance can be beneficial if you are purchasing the home from an estate. If the former owner didn’t leave a will, anyone could step forward to sue and claim that property. However, your policy would protect you from any claim to your home.
- When buying a foreclosure property, the person who owned the property prior to you purchasing it could file a lawsuit against the bank in relation to the foreclosure, and you would be dragged in by virtue of your ownership. Your title insurance policy would allow the underwriter to step in on your behalf.
- You might not know that new construction is covered under title insurance. With there only being one owner of the property, what issues could arise with the title? The home doesn’t have a history of ownership, but the land does. If the land wasn’t developed properly, liens aren’t paid, or someone places a claim to the land as an heir, title insurance is key. Also, referring back to #4, the builder may not be paying the subcontractors for the work. When you take ownership after settlement, you assume those debts, and the subcontractors could place a mechanic’s lien on the property.
- Title insurance can also help with discrepancies regarding boundary and zoning disputes, but that requires that you have a survey done before you take ownership of the property. A survey prior to settlement is important.
- If you have a loan, your lender will require you to buy lender’s title insurance for them. That policy only covers the lender which is why purchasing your own policy that protects you as the home owner is so important.
In the state of Virginia, the professionals at Highland Title + Escrow are required to offer title insurance policies to you, though it is not required that you purchase a policy. Likewise, professionals in our Maryland offices can speak with you about the different types of policies, though the State does not require that coverage be purchased. With that said, we cannot emphasize the benefits enough and welcome your call to one of our attorneys for more information. Also, check out this piece from our blog and this helpful comparison guide. We are here to assist you with any questions regarding the closing process, and that includes title insurance. Click here, or give us a call at 703-723-3300.