The largest investment of the American Dream is usually Home Ownership. Whether itÂ’s finding that perfect home to raise a family or as an investment that will hopefully grow in the future. It is typically your most valuable asset. You take steps when purchasing real estate to make sure the property is in good condition and structurally sound. However, most Buyers donÂ’t really question the condition of the title to the property. This could prove to be a costly mistake.
Title insurance protects you from any hidden title issues and gives you peace of mind knowing that your rights as Owner(s) are insured legally. Title Insurance should be negotiated in most real estate transactions to protect the Buyer(s). The safety of your investment depends on sound title to the property. To obtain title insurance the title company will do extensive research by industry experts and issue a title commitment. The commitment for title insurance is an insurance form promulgated by the Texas State Board of Insurance. It discloses ownership, encumbrances, exceptions to the title insurance coverage and requirements (if any) to clear title prior to closing. This document is delivered generally within seven days after the title company receives the contract for the sale for both parties to review. The title companyÂ’s escrow officer works on clearing any issues that must be addressed prior to closing and decides if any exceptions must be made to the title insurance policy being offered. It is possible for title defects to occur even after a diligent search of public records is done by the experts. Title insurance also protects the owner from losses due to problems that may arise after the property is purchased.
If you are not the first owner of the property these problems are more likely. These problems can include; human error, recorded documents filed incorrectly, forged deeds, false affidavits, undisclosed heirs, transfer of property by a minor, married seller not selling with spouse and invalid divorce to name a few. Title insurance protects you if a lawsuit occurs attacking your title. It corrects the title problem or pays the insuredÂ’s losses up to the face amount of the policy. The policy will also protect you once you have sold the property. This protection is for any defects prior to your purchase that causes a loss to a buyer if the title was passed thru you to them. Title insurance is a one time premium and lasts for as long as you own your home. Title insurance rates are regulated and set by the Texas Department of Insurance, just look for a quality company when selecting who will provide your title insurance. Financial soundness is vital and many are publicly traded companies.
Also, if you are getting a mortgage loan to purchase the property a mortgage policy will be required by the lender. This is to protect their interest in the form of a loan to you. A title policy is also normally paid in the event of a refinance; however, there are discounts depending on the length of time the current policy has been in effect. No one besides a title company can tell you honestly that the title to the property is clear. You are not obligated to obtain title insurance. However, without title insurance you have no protection if any claims are made after closing. A claim can be filed a day after closing or thirty years later, you simply never know.
