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Dec, 2013

Why Is Owner’s Title Insurance So Important?

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Why Is Owner’s Title Insurance So Important?

Many homeowners wonder why it is important for them to carry title insurance on their homes. The following is a list of examples of land title problems that could affect the ownership of real estate. Although such problems may not surface until after the home is bought, they can result in financial loss.

  • Claims of creditors against the real estate sold by heirs
  • Forged deeds, mortgage releases and other documents
  • Claims by children born or adopted after the date of a will
  • Claims by previously undisclosed heirs
  • Administration of estates of persons absent but not deceased
  • Deeds by minors, aliens or persons of unsound mind
  • Descriptions of property that appear accurate but are not
  • Mistakes in public records
  • Misinterpretations of wills
  • Fraudulent acts
  • Title insurance is paid once, usually at the real estate closing. There are not renewal premiums, as there are with casualty insurance.

An owner’s title insurance policy is usually issued in the amount of the sales price. Under its coverage, the title insurer will pay for defending against an attack on the title as insured and will pay valid claims. Coverage lasts as long as the buyer’s heirs have an interest in the property.

The owner’s title policy should not be confused with lender’s protection. The typical protection against land title problems, including hidden hazards, is designed to protect the lender’s security interest in the real estate purchase. The owner of the property is not protected unless the homebuyer requests and pays for an owner’s title insurance policy. Also, it is important to understand that while a lender’s protective policy decreases in amount of coverage as the property is paid for the homeowner, an owner’s policy does not decrease in the amount of coverage.

When buying your home, be sure to have a careful search made of the public records and then have a knowledgeable person represent you in examining the conditions of the title to make sure you are buying what you assume you are buying. Purchase an owner’s title insurance policy that will protect you against hidden hazards and a myriad of other defects. The cost of a policy is a small price to pay for your peace of mind and the perpetual protection you need for your interests in the property.

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