WhyTitleInsurance

Why Do You Need Title Insurance?

Title Insurance.

It's a term we hear and see frequently -- we see reference to it in the Sunday real estate
section, in advertisements and in conversations with real estate brokers. If you've
purchased a home before, you're probably familiar with the benefits and procedures of
title insurance. But if this is your first home, you may wonder, "Why do I need another
insurance policy? It's just one more bill to pay."

The answer is simple: The purchase of a home is most likely one of the most expensive
and important purchases you will ever make. You, and your mortgage lender, want to
make sure that the property is indeed yours -- lock, stock and barrel -- and that no
individual or government entity has any right, lien, claim to your property.

Title insurance companies are in business to make sure your rights and interests to the
property are clear, that transfer of title takes place efficiently and correctly and that your
interests as a homebuyer are protected to the maximum degree.

Title insurance companies provide services to buyers, sellers, real estate developers,
builders, mortgage lenders and others who have an interest in a real estate transfer.
Title companies routinely issue two types of policies -- "owner's," which cover you, the
homebuyer; and "lender's," which covers the bank, savings and loan or other lending
institution over the life of the loan. Both are issued at the time of purchase for a modest,
one-time premium.

Before issuing a policy, however, the title company performs an extensive search of
relevant public records to determine if anyone other than you has an interest in the
property. The search may be performed by title company personnel using either public
records or more likely, information gathered, reorganized and indexed in the company's
title "plant."

With such a thorough examination of records, any title problems usually can be found
and cleared up prior to your purchase of the property. Once a title policy is issued, if for
some reason any claim which is covered under your title policy is ever filed against your
property, the title company will pay the legal fee involved in defense of your rights, as well
as any covered loss arising from a valid claim. That protection, which is in effect as long
as you or your heirs own the property, is yours for a one-time premium paid at the time of
purchase.

The fact that title companies work to eliminate risks before they develop makes the title
insurance decidedly different from other types of insurance you may have purchased.
Most forms of insurance assume risks by providing financial protection through a pooling
of risks for losses arising from an unforeseen event, say a fire, theft or accident. The
purpose of title insurance, on the other hand, is to eliminate risks and prevent losses
caused by defects in title that happened in the past. Risks are examined and mitigated
before property changes hands.

This risk elimination has benefits to both you, the homebuyer, and the title company: it
minimizes the chances adverse claims might be raised, and by so doing reduces the
number of claims that have to be defended or satisfied. This keeps costs down for the
title company and your title premiums low.

Buying a home is a big step emotionally and financially. With title insurance you are
assured that any valid claim against your property will be borne by the title company, and
that the odds of a claim being filed are slim indeed.

Isn't sleeping well at night, knowing your home is yours, reason enough for title
insurance?

Article by CLTA

Still have questions? Contact me today for a
free consultation!

Colin O’Neal
Buyer’s Agent
200 Rufe Snow North, Suite 202
Keller, TX 76248
(817) 898-0145 Office
(817) 898-1771 Fax
colin@househuntersdfw.com