Title Insurance:
Necessity?
In working with buyers, I frequently get asked about the necessity of title insurance. To every buyer, I discuss a variety of topics commonly arising during the home purchase process.
One of those items will always be Title Insurance. A buyer needs to know that the bank providing the loan will ask the buyer to pay for the lender's title insurance. Banks seek this title insurance to ensure if anything is wrong with the title examination whether error or fraud that the bank has no financial exposure.
As I share with my clients, a buyer should be wise to protect them from financial exposure to unknown problems with the title received as ownership is transferred from Seller to Buyer. Like any insurance, Owners Title Insurance is purchased for the possible unforeseen problem that can cause financial loss. Unlike most insurances though,Owners Title Insurance is paid for at the time of settlement and no further payments are needed.
In fact, this title insurance is perpetual. Even if an individual buys and sells five homes over 20 years, if title insurance is purchased for each home, the individual is protected against loss as relates to the title for any home purchased and/or sold in the past. The one caveat is the individual must have a copy of each home's Owners Title Insurance policy.
Though you may know every bank that lent you money and know they are still in business(good luck with that!), the Lender Title Insurance does you no good as it insures the Lender(Bank's) financial interest only. So Owners Title Insurance is a must.
Shred your copy of the deed when a home is sold but hang on to the Title Insurance forever!!!
To underscore the importance of title insurance, I have include Advance Title's recent handout on "why title insurance"
Please note: all those scary things like forged signatures or inaccurate paperwork don't happen all the time. But neither do car accidents and home fires!!!
Title Insurance is a Necessity
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