Protecting Your Home with Title Insurance
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Purchasing a home is likely the biggest investment you will make in your lifetime. So before you close, you need to be sure that that nobody else has a claim to the property.
A title 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 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 insurance company performs an extensive search on the title history of the property. The title company can usually identify any title problems that may arise and clear up these problems 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 any recorded limitations on your ownership. It will also set forth the title insurance company's responsibilities should any claim covered by the policy terms arise. 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. If this happens, the title company will defend your title and will cost you nothing.
- Defective title — "Defective title" covers any number of problems with the title to your home. It can even include a "contested title". 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 complicated problems define "Defective title." The title insurance company will find these problems, or if they miss them, insure your loss up to the amount of the policy.