Title Insurance = Peace of Mind
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The biggest investment you will make in your lifetime will probably be the purchase of a home. So before you close, you need to know that no one else has a claim to the property.
A title insurance company does all the research to insure that a property has clear title. Making sure that a property is clear of all legal encumbrances is the job of a title insurance company.
You pay the title company a single premium which includes the cost of verifying clear title and covers you in case some fault is later discovered in the title.
The title company performs an extensive search on the title history of the property. Through its research, the title insurance company can almost always find any title problems and have these problems cleared-up before you close on the property.
Real Estate law is extraordinarily complex. Title companies make sure that all the T's are crossed and all the I's are dotted so you don't end up with a clouded title and legal problems. Your title insurance owner's policy will describe the property and outline the limitations on your ownership. It will also cover what the title company is responsible for. Title insurance usually covers:
- Contested title — Someone, usually a previous owner or occupant, claims they still own the property or have not given up their claim. In this case, the title company will defend the title and will cost you nothing.
- Defective title — This is a general term for a legal problem with the title that cannot be corrected and includes "contested title" above. Other examples of title defects include problems with legal access to the property, easements that make the property less usable, unusable, or unsaleable. Any number of other complex problems define "Defective title" or "Clouded Title." The title insurance policy will protect you from these errors if the title company doesn't discover them.