If you own property or are buying/selling a home, it is important to understand what title insurance is and how a title insurance company can help protect your interests. Title insurance protects against losses caused by mistakes in public records or matters of law that arise over real estate ownership.
A title insurance company provides coverage to the buyer and lender if any errors surface regarding these issues once they buy the house. We’ll cover the different services a Title Insurance Company provides, which pays for title fees, and other related questions about owning property that can be addressed with their help.
Title Insurance Companies and What They Do
A title insurance company is a specialized kind of insurer that specializes in Title Insurance policies. These companies investigate and verify the legal ownership of a property, ensuring that there are no existing liens or titles from previous owners that could interfere with a potential sale.
They also provide coverage against forgeries, errors in public records, undetected easements, and other matters of law related to the property’s title. It is important to note that title insurance only covers problems arising after the policy purchase - therefore, it does not protect against issues before you buy the house.
Title Insurance Companies also help facilitate real estate closing by preparing documents such as deeds and mortgages. They act as an escrow agent, collecting and disbursing funds throughout the transaction.
How Title Insurance Coverage Works
A Title Insurance Company provides coverage for losses incurred by mistakes in public records or matters of law that arise after a home purchase. It is important to note that title insurance only covers losses due to events occurring after the policy was purchased; pre-existing issues are not covered.
Purpose of Title Insurance
Title insurance is designed to protect the buyer and lender from any existing claims on a property that was not apparent during the sale. This includes liens, undisclosed easements, and errors in public records or matters of law related to title ownership.
In addition to protecting against unknown claims, title insurance can also be used to help resolve disputes between buyers and sellers regarding title transfers.
Who Pays For Title Fees?
Typically, title insurance fees are paid by the buyer of a property. However, in some cases, sellers may choose to pay for title insurance as part of their closing costs. It is important to check with your local real estate laws to determine who pays for title fees in your area.
Different Types of Title Policies & Coverage
Title insurance companies offer different policies depending on the customer's needs. These include Owner’s Title Insurance, Lender’s Title Insurance, and Extended Coverage Policies.
Owner’s Title Insurance
Owner’s Title Insurance provides coverage to buyers against losses due to matters of law related to title ownership, errors in public records, or any liens that may not have been discovered during the property’s purchase. This type of insurance typically covers all legal costs associated with defending your title rights and any financial losses you might incur if you cannot defend your title.
Lender’s Title Insurance
Lender’s Title Insurance provides coverage for lenders in case there is a problem with the title after they provide financing for a property purchase. This type of insurance protects against losses due to disputes over ownership, errors in public records, or other matters of law related to title ownership.
Extended Coverage Policies
Extended Coverage policies provide additional coverage for various issues that may arise after the property is purchased, such as boundary disputes, erroneous documents, and fraud.
These policies are typically more expensive than standard Owner’s Title Insurance policies but can be worth it for buyers who want extra peace of mind when purchasing a new home.
Understanding what title insurance is and how a title insurance company can help protect your interests is important if you own or are considering buying/selling a home.
By being aware of the different types of services they provide and who pays for title fees, you can be sure to make informed decisions and protect your real estate investments.
Who does Title Insurance protect?
Title insurance protects the buyer and lender from potential losses due to errors in public records, unforeseen liens, or other matters of law related to title ownership.
The policy covers any legal costs associated with defending your title rights and any financial losses you may incur if you cannot defend your title. It is important to note that title insurance only covers problems arising after the policy purchase - therefore, it does not protect against issues before you buy the house.
By understanding what Title Insurance is and who it protects, buyers can be sure they are making informed decisions when purchasing a home and protecting their real estate investments.
A Title Insurance Company can provide invaluable assistance throughout this process by helping ensure that all necessary paperwork is in order, facilitating the real estate closing process, and providing coverage for potential losses.
How Much Title Insurance Will I Need?
The amount of Title Insurance coverage you will need depends on the type of policy you choose. Owner’s Title Insurance policies typically provide the most comprehensive coverage and are typically required when purchasing a home. This policy's coverage can vary depending on the property, value, and potential associated risks.
When selecting a Lender’s Title Insurance policy, the lender may require a minimum level of coverage to protect their financial interests if there is a problem with the title after they provide financing for a property purchase.
Extended Coverage policies provide additional protection against potential losses such as boundary disputes or fraud but typically come at an extra cost. The coverage needed for these policies can vary depending on the property and potential associated risks.
Who Should Purchase Title Insurance?
Title insurance is typically required for any real estate transaction involving the sale of a home, but it can also be beneficial for other types of transactions. For example, title insurance can protect against errors in public records or liens that may not have been discovered during the purchase process. It can also provide buyers coverage if they cannot defend their title rights due to unforeseen issues.
In short, anyone looking to purchase or sell a property should consider purchasing title insurance to protect their interests and ensure all necessary paperwork is in order before closing. Additionally, lenders may require borrowers to purchase Title Insurance policies to secure financing for their purchases.
FAQS
Why is BC insurance so expensive?
Title Insurance in BC can be expensive because it is a specialized form of insurance that provides coverage against losses due to errors in public records or matters of law related to title ownership. These policies require more detailed data collection and analysis, which often increases the cost.
Does title insurance cover boundary disputes?
Most Title Insurance policies do not cover boundary disputes - however, some companies may offer Extended Coverage policies that provide additional protection against these issues. It is important to speak with your title insurance provider to determine what coverage you need and whether or not it includes boundary disputes.
How long does title insurance last?
Title Insurance generally lasts for as long as the policyholder owns the property - typically up to 20 years. After that, the policy must be renewed to remain in effect.
Conclusion
In conclusion, a title insurance company aims to assure buyers that their purchase is protected against legal claims or disputes associated with the property’s title. They manage all cost- and time activities in transferring titles from one person or business to another.
Most importantly, you know you are purchasing according to the law and protecting yourself from legal issues and encumbrances, such as unpaid homeowner’s dues or back taxes. If you are purchasing a home, it is important to do your research and get the help of a trustworthy team like a title insurance company to ensure your real estate transaction is secure and successful.
