Home Buyer FAQs: Do I Need Title Insurance?

title owners insuranceBuying a home is exciting, but it can also be a little intimidating, especially if it’s your first home purchase. Home ownership is a big financial commitment, so it’s important to take every precaution in order to ensure that you are making a wise purchase, from hiring a home inspector to getting a survey of the property. One of these “must have” precautions is owner’s title insurance.

What is title owner’s insurance?

Owner’s title insurance, otherwise known as an owner’s policy or title insurance, protects you from financial loss as a result of problems with the title or deed to the house you’re purchasing. The types of problems covered by an owner’s policy often don’t come to light until after the closing, making it especially important to be covered by insurance.

The owner’s policy is usually for the same amount as the sale price of the home, and is paid in full at the closing. If a covered issue does arise, the title insurance company will either pay the monetary costs to settle the matter or provide legal representation to do the same. But what are these problems that would need to be dealt with in the first place?

The most common reasons for title insurance claims

Before closing, the title professional will do a title search to ascertain any problems that need to be fixed. About one third of all title searches find an issue, which the title insurance company will require to be fixed before closing in order to protect themselves from financial loss. Even then, issues can fall through the cracks, only coming to light after you’ve closed the deal and moved in to the house! The most common types of title insurance claims include:

  • Errors in the deed– This could include anything from a simple typo to a serious mistake.
  • Intentional fraud or forgery– For instance, an identity thief assuming a false identity to sell property that doesn’t belong to them.
  • Will disputes- Say sibling A claims that a home was promised to them by their parents. After selling the property, sibling B appears with proof that their parents actually intended the property to go to sibling B, not sibling A. Title insurance would protect you, the innocent buyer, from financial loss due to the will dispute that you never even knew about.
  • Missing heirs- You never know who could come out of the woodwork claiming a house was their inheritance.
  • Previous owner’s debts- This could include unpaid local taxes or unpaid bills from a contractor or remodeler, though usually these issues are found during the title search stage.

Most people assume these issues will never happen to them, but they are surprisingly common! The best way to protect yourself is to purchase title insurance, and to work with an experienced real estate agent who can guide you through every step of the home buying process.

If you’re interested in buying a home in the north Atlanta area, contact The Premier Group today! Our Woodstock real estate agents can help you make your home buying dreams a reality.

Photo by posulak via freedigitalphotos.net