Title insurance is a complicated topic, and uncovering title issues is something even the most competent title agencies can’t always do. The purpose of title insurance is to protect the lender from loss stemming from title defects or errors in the filing and record keeping of title documents.
Title insurance is required for all mortgages since you must always determine the owner of the property before it’s conveyed.
This article explores the ins and outs of title insurance and gives you some helpful tips on understanding how title insurance works and why it’s important.
How Title Insurance Works
Lenders, realtors, potential home buyers, and everyone involved in a real estate transaction needs a “clear title” for the process to continue. Clear title means there are no issues concerning the home’s title, and realtors can commence the conveyance process.
Title agents conduct title searches when a home is sold to a new owner, and both lenders and borrowers need title insurance for damages incurred from title defects, liens, or other encumbrances on the property.
Why Title Insurance is Important
Title insurance protects all parties in a real estate transaction from the risk associated with title. For example, a title search may uncover the home you’re looking at has unpaid taxes from several years ago. Without title insurance, these unpaid taxes are now the buyer’s problem.
Lender’s title insurance protects the lender up to the mortgage amount on the property in case of title defects like liens or encumbrances. The home buyer is typically responsible for paying the lender’s title insurance.
Title Searches
Title agencies use title searches to examine public records to uncover issues with title that prevent the real estate transaction from closing. During a title search, title agents also look at court records, property deeds, and historical land records.
While we’re talking about title insurance when buying and selling a home, anyone can order title searches at any time to find out the title history of any property on public record.
Purchasing Title Insurance
There are plenty of regional title companies throughout the United States, however, there are four main underwriters for title insurance. They are:
- First American Title Insurance
- Fidelity National Title Insurance
- Old Republic National Title Insurance
- Stewart Title Guaranty Company
Reaching out to a national or local title insurance company is a great way to get an idea of the cost of title insurance in your area. In fact, the cost of title insurance varies and depends on:
- The purchase price of your home
- The location you live
- Your title insurance provider
- Market conditions
Final Thoughts
After reading this article, we hope you understand how title insurance works and its importance in real estate transactions. Without title insurance and title searches, lenders and buyers may incur significant losses and damages from title issues.
Find out why Kaya Homes is the leader in Long Island real estate and are your go-to realtor in the Lynbrook, Oceanside, Malverne, Hewlett, Valley Stream, East Rockaway, Woodmere, Cedarhurst, Hewlett Harbor, and Freeport area.
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