What Is Title Insurance and Why Do You Need It?
Title insurance is a form of insurance that covers losses caused by title defects. Read this article to learn more about what title insurance is and why you need it for your real estate transaction.
What is Title Insurance?
Title insurance is a type of insurance coverage that covers a homeowner against losses that can result from defects in the legal title to a property. It helps to provide protection against a variety of risks related to purchasing a home, such as a lien, or a mortgage that is not properly recorded, or even a forgery in the ownership records. In the event that a defect is discovered, the title insurer is responsible for covering the cost of defending the homeowner or reimbursing them for their losses.
Why Do You Need Title Insurance?
Title insurance is important because it provides protection against a variety of potential issues that could arise when purchasing a home. It protects the homeowner from any unknown title defects that may be present in the property, such as a lien, a mortgage that wasn't properly recorded, or a forgery in the ownership records. In the event that a defect is discovered, the title insurer is responsible for covering the cost of defending the homeowner or reimbursing them for their losses.
It is also important to keep in mind that title insurance may also be necessary when taking out a mortgage. Earlier this year, the Consumer Financial Protection Bureau issued a statement that required all lenders to provide a title insurance policy to their borrowers. This ensures that the lender's investment in the home is secured in the event that a defect of title is discovered.
In short, title insurance provides protection for homeowners and for lenders against losses that may occur due to defects in the legal title to a property. By purchasing a title insurance policy, homeowners can rest assured that they are protected from potential issues that could arise during the process of buying a home.