A standard owners title insurance policy costs approximately $800 to $900, and is valid for the life of the property. The premium is paid by the seller of the property, and it provides assurance to the buyer and lender that the title is clear and error-free. This insurance is required by most states, but not all. To compare premiums between different states, look at the state’s requirements. In Texas and Florida, for example, buyers are not required to purchase title insurance. However, some choose to purchase the policy as a safeguard against potential title problems.
A title insurance policy protects a home owner against legal fees and any problems that might arise due to title problems. It also protects the owner from any issues created after the purchase, such as problems resulting from eminent domain, in which the government seizes private property for a public use. Even if a homeowner does not plan to stay in the home for a long time, title insurance may be worth the expense.
Title insurance is an important part of the property buying process. It can protect buyers against a number of unexpected issues, including liens or encumbrances that may affect the ownership of the property. Unreported defects or encroachments may cause title issues at closing, so title insurance can protect the buyer from these unexpected costs. It can also protect lenders from loss resulting from fraudulent documents. While the policy protects the buyer, it may also cause a slight delay.
Title insurance protects homebuyers from the risk of losing their investment. A title company will investigate any issues related to ownership before you purchase a home. A few examples of these problems include unpaid property taxes, fraud, forgery of previous paperwork, and a spouse claiming ownership. Without title insurance, you could end up with a property you can’t sell. But with a policy, you’ll be protected and assured of your ownership and the ability to sell it.
There’s no limit to the number of policies you can buy or sell. Many insurers will pay up to 80 percent of your premium dollars, and a substantial amount goes toward the cost of hiring a professional. The remaining 20 percent is put into reserves, and the remainder goes to cover possible claims. In 2005, a full 36 percent of residential real estate transactions were affected by title problems. The benefits of title insurance are clear: it pays for legal fees, and it reimburses losses.
Although title insurance is not directly regulated, RESPA does allow homebuyers to choose a title insurance company. While many homeowners opt to use a title insurance company recommended by their lender, it’s a good idea to shop around to find the best deal. Title insurance companies can offer lower rates and better coverage than sellers do. Be sure to choose a stable and reputable enterprise. Ask about their claims history and insurance protection. You’ll be glad you did.