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How Much Does Title Insurance Matter?

Title insurance, simply defined, is a type of insurance for homebuyers which protects the house title. Obtaining title insurance is considered as a standard practice in the real estate world, as it can protect a homebuyer and any associated lender from losing money by losing the house itself, in case ownership of the seller is found to be unclear in future. Very few people actually get to the point of having to call their title insurer, but that is not a reason to not get title insurance. Because, if you buy a house without title insurance, you may end up losing it someday! So, how exactly does title insurance work, and how does it impact your ownership of the house? Read on to find out. How to obtain your title insurance? Typically, your closing agent, or escrow, is going to take care of all the hassles associated with obtaining your title insurance. That is, once you sign your purchase agreement. In most cases, the attorney, or closing agent, associated with the transaction will pick a title insurer from among the major underwriters of the United States. Your one-time title insurance is likely to cost you close to $1,000. However, if you live in a state which traditionally encourages sellers to foot the bill, you may not have to pay anything on your own. What may happen in the absence of title insurance? Things can go wrong in many different ways in case you fail, or ignore, to obtain your title insurance. You may run into an issue if your seller turns out to be dishonest, for example, posing as a seller even though he is actually a renter. Or, things may go awry if it turns out that your seller bought the house 15 years ago in a partnership with his brother with whom he does not talk anymore, having no idea that his brother needs to sign the papers, as well. Sometimes, your seller may find that the ex-husband of the woman from whom he purchased the house co-owned the house, and did not really sign off the papers during the sale. Another scenario may involve an outdated will in the picture, a newer version of which entitles someone else to your beloved house. At times, a title issue may not engulf the whole abode, but may touch a part of it. For example, if the previous owner failed to pay his debts related to the property to some agencies - debts like child support, contractor’s fees, taxes and others - the law may make you responsible for paying the same! If anything unwanted ends up occurring, like mentioned above, your insurance will come to your rescue. Keep in mind, however, that you do not need title insurance if you purchase a co-op house, as that basically works like purchasing corporation shares. Is title insurance a single policy? Generally, title insurance tends to be a combo of one buyer’s policy and one lender’s policy. The latter only applies when you take out a mortgage loan. Your lender needs the assurance that any legal costs or outstanding mortgage payments will be covered in case you somehow lose your house to a third-party claimer.

Real Estate Law

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Katherine M. Blahut, PLLC

Katherine Blahut has been a board certified real estate lawyer for more than 15 years. She can handle any and all of your real estate needs. You can call her at: 1-786-333-4260