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Home > Resource Center > Expert Advice > Home Title Insurance Resource CenterExpert AdviceHOME TITLE INSURANCEDo you need it? Title insurance is a policy of insurance that protects the buyer and/or mortgage lender against loss or damage sustained if a claim covered under the policy terms is made. These terms typically involve defects in the title or survey that might affect your right of ownership and ability to resell the property. This includes unpredictable or undetectable issues such as conflicting interests or ownership of the land, and mortgages or other encumbrances affecting title. Plus, this insurance covers compliance risks such as noncompliance with restrictive covenants, the existence of work orders and major encroachments, as well as access-related problems due to right-of-way or easements, or other defined rights and defects. Other issues that are covered include fraud and missing heirs.
What does "Title" mean? Title is a legal term that refers to ownership of a property. As a homebuyer, you want to be sure you own the property and have the right to convey it to someone else at a future date. Prior to your home closing, public records are searched to determine the previous ownership of, and dealings relating to, the property. For example, there may be an existing mortgage on it, liens for outstanding taxes, etc. The property should be free of these items at closing. Occasionally, defects regarding the title are discovered after closing, or are not handled before closing, which can at some future date negatively affect the marketability of the property, or even cost the buyer money to remedy. For example, if the property was conveyed to the previous owner fraudulently, the real owner may demand his/her rights of ownership. Other risks that may be covered under the policy include the forced removal of existing structures on the property, unregistered rights-of-way, and zoning and set back non-compliance. Generally, there are certain types of risks that are not to be covered, such as environmental hazards, native land claims, and problems agreed to in the purchase agreement or not disclosed to the lawyer. Discuss with your lawyer what risks are and are not covered, as well as the parameters of the policy, which remain in effect as long as the insured buyer, or their heirs, retain title to the land. Title insurance is available for new and resale homes, condominiums, cottages, rural properties, residential rental properties up to four units, and farms. Do I need title insurance? Mortgage fraud in the United States is expected to increase as more people enter the homeownership market. Whether you buy a new or resale home, pursuing home title insurance may be in your best interest, depending on the circumstances of your purchase. You may also be required by your lender to buy the insurance. Discuss it with your tax professional and lender, and reap the benefits of being an informed consumer.
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