Importance of Title Insurance
Title insurance is important because it protects the purchaser and lender against losses or damages that may result from defects in the title of the property. Title defects can arise from many sources, such as errors in public records, missing heirs, or disputes over ownership. Title insurance provides financial coverage for these types of issues, should they arise in the future.
Common title issues include:
Unresolved liens or judgments
Forged or missing signatures on the title or deed
Errors in the public records, such as incorrect legal description
Encroachments or boundary disputes
Title fraud, such as impersonation of the rightful owner
Disputes over ownership, such as will contests or heir disputes
Unpaid property taxes or special assessments
Issues with easements or rights of way
Clouds on title, such as undisclosed heirs or claims of ownership
Issues with previous ownership, such as missing or incorrect transfer of title.
Some benefits of title insurance include:
Protects against financial losses from title defects
Covers legal fees to defend against title claims
Provides peace of mind for the owner and lender
Helps ensure a smooth and secure real estate transaction
Protects the owner's investment in the property.
While title insurance provides comprehensive protection against title defects, it does not cover every type of loss or issue that may arise. Some limitations of title insurance include:
Issues that arise after the policy is issued
Issues known to the buyer or disclosed as an exception in the title report or commitment
Losses caused by zoning laws or building codes
Environmental hazards or contamination
Certain liens or encumbrances not disclosed in the title report
Issues with title that result from fraud or illegal acts committed by the insured
Losses resulting from undisclosed or missing easements or rights of way
Losses from intentional acts or gross negligence by the insured.
Every title insurance policy is unique, so it's important to understand its limitations and the scope of coverage provided by your title insurance policy to fully understand the protection it provides. A real estate attorney can assist in the review and interpretation of the title insurance policy and provide guidance on the scope of coverage provided. An attorney can also assist in identifying and resolving title issues or defects, which can help minimize the risk of losses covered by the title insurance policy. In addition, an attorney can help ensure that the title is transferred correctly and the closing process is handled correctly. Having a real estate attorney involved in the process can provide peace of mind and help ensure a smooth and secure real estate transaction.