What is title?
Title is your ownership right to your property, and is transferred from the seller to the homebuyer.
What is a title search?
A title search is an early part of the home buying process to uncover issues that could prevent your right to the property.
Title professionals review public records to see if there are any problems or defects that could cause you legal issues, and clear them when possible.
What is title insurance?
There are two different types of title insurance: the owner’s policy and the lender’s policy.
An owner’s policy protects your property rights for as long as you or your heirs own the home.
A lender’s policy is usually required by the lender and protects only the lender’s financial interests. The buyer typically pays for this policy, but this varies depending on geography. We recommend you ask an ALTA member how it’s handled in your area.
Your lender will likely insist on lender’s insurance. However, it’s up to you to make sure you protect yourself with owner’s title insurance.
Why should I purchase owner’s title insurance?
Owner’s title insurance protects your investment in your property from certain future legal claims regarding ownership of your property.
For a one-time fee, you and your heirs* receive coverage for as long as you own your home. The owner’s policy also covers potential legal fees and court costs for settling claims covered by your policy.
What does owner’s title insurance cover?
Sometimes undiscoverable defects can come up after the title search. Under an owner’s title insurance policy, you are protected against certain undiscovered errors in the title.
Title issues include unknown:
- Outstanding mortgages and judgments, or a lien against the property because the seller has not paid his taxes
- Pending legal action against the property that could affect you
- Unknown heir of a previous owner who is claiming ownership of the property
Unforeseeable title claims include:
- Forgery: making a false document
- For example, the seller misrepresents the identity of the person who sold the property.
- Fraud: deception to achieve unfair gain
- For example, someone steals your identity and either sells your house without your knowledge or consent, or takes out a second mortgage on the property and walks away with the money.
- Clerical error: inconsistent paperwork and historical records
- For example, an unforeseeable discrepancy in the property or fence line can cause confusion in ownership rights.
What does owner’s title insurance cost?
The one-time payment for owner’s title insurance is low relative to the value of your home. A typical title insurance policy costs around 0.5% of the home’s purchase price.
How long am I covered?
Your owner’s insurance policy lasts for as long as you or your heirs* own your property. Your life will change over time, but your peace of mind never will.
How does owner’s title insurance provide peace of mind?
If you’re buying a home, owner’s title insurance lets you rest assured, knowing that you’re protected from having to losing your home due to existing debts or legal problems.
That’s one of the many reasons that, each year, more than 80% of homebuyers choose to get owner’s title insurance.
How does owner’s title insurance reduce your risk?
If you’re buying a home, there’s an easy way to avoid costly hidden problems.
Ask for an owner’s title insurance policy before closing to protect you from unforeseen legal and financial title discrepancies.
Here are just some of the many situations that you’ll be protected from if you have owner’s title insurance.
- Forgery, such as making a false document. For example, the seller misrepresents the identity of the person who signed the title.
- Fraud, such as deception to achieve unfair gain. For example, someone steals your identity and either sells your house without your knowledge or consent, or takes out a second mortgage on the property and walks away with the money.
- Clerical error, such as inconsistent paperwork and historical records. For example, an unforeseeable discrepancy in the property or fence line can cause confusion in tracking the title history.
- Undiscovered tax liens, such as an unpaid tax on the property. For example, if the previous owner left a debt unpaid, without owner’s title insurance you would be responsible for paying that tax.
- Undisclosed easements, such as a right-of-way through your property. For example, your neighbor was granted right-to-pass through your property by the previous owner.
Why is owner’s title insurance a smart investment?
A home is likely the single largest investment you will make in your life.
You insure everything else that’s valuable to you — your life, car, personal property, health, pets, jewelry, etc. Why not your largest investment?
Owner’s title insurance is the best way to protect your property rights. For a one-time fee, it covers you and your heirs for as long as you own your home.
What happens at closing?
Closing is the final step in executing the homebuying transaction.
It is the process that allows the transfer of ownership to occur. Upon completion of the closing process, you get the keys to your home!
Where can I get more information?
The American Land Title Association helps educate homebuyers like you about title insurance so you can protect your property rights.
Check out www.homeclosing101.org to learn more about title insurance and the home closing process.