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If you’re in the process of buying a home or plan to buy one this year, it’s important to understand what title insurance is and what it covers. As a home buyer, you’ll be encouraged to purchase owner’s title insurance. But what exactly does owner’s title insurance cover and what’s the difference between lender’s title insurance and homeowner’s title insurance?
What Is Owner’s Title Insurance?
Owner’s title insurance protects home buyers from defects or problems with a land title in the transfer of property after they purchase a home or land. In simple terms, title insurance protects the home buyer if, after you’ve purchased property, someone comes forward to say they had a lien or other rights to the property, alleging that the seller who sold it to you didn’t own it free and clear. Owner’s title insurance is usually paid by the home buyer or the seller at closing, depending on the state and who has agreed to pay it in the contract.
What Does It Cover?
If a title dispute should arise after you’ve bought a home or land, the title insurance policy will typically pay to defend you in court if anyone challenges your title. And should you lose the case, title insurance will compensate you for the equity you have in your home.
What Is Lender’s Title Insurance?
Most lenders will require that the home buyer purchase lender’s title insurance. This type of policy protects the lender’s interest in a property if title issues should arise after closing. The premium that the buyer pays on this type of policy usually goes down over the life of the mortgage loan as the amount owed to the lender decreases.
What Is Done to Minimize Title Disputes?
Ideally no title dispute will arise after you purchase your home. That’s because the title company or attorney handling your title services will search public property records prior to closing to trace the ownership of the property. They will do their best to make sure that the seller owns and has the right to sell the property. They will also look for things such as clerical errors and omissions, undisclosed heirs who might have claims to the property, and any liens that may exist on the property. They will also look for any signs of fraud. If they find any title issues, these have to be dealt with prior to closing and before a title insurance policy can be issued.
Trust Champion Title & Settlements with Your Title Services
Champion Title is a full-service title insurance agency providing title insurance and closing support to streamline closings and increase compliance for our diverse clientele including home buyers. We fully embrace technology and are proud to offer clients myriad tools and services to efficiently and accurately assist them with all of their closing needs. For more information, contact us today!
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