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How Does Title Insurance Work?

Posted by Kim G. Bosshardt | May 10, 2023 | 0 Comments

how does title insurance work

Buying a property can be an exciting adventure, but as with any large purchase, risks are involved.

There could be hidden liens or other issues that complicate the ownership process. Because of this, lenders often require title insurance when purchasing a home or commercial building to protect buyers from these potential pitfalls.

Let's dive a bit deeper into how title insurance works, its benefits and drawbacks, and how you can get help from Bosshardt Title today.

How Does Title Insurance Work?

Title insurance is like a shield protecting one of your most valuable assets. It safeguards you from potential title issues and ensures that the sale or transfer of the property goes smoothly.

From an abstract concept, this protection has become very concrete in recent years: title insurance can save homeowners from costly legal fees if there's any issue with their title or deed.

So how exactly does it work?

The process begins when a buyer purchases a policy before closing on their home. A qualified professional will then search public records for claims against the title, such as liens, unpaid taxes, survey problems, and document errors. If anything suspicious surfaces during the search, they'll investigate further and ensure that all issues are resolved before settlement occurs.

What Are the Different Types of Title Insurance?

Like any insurance policy, there are different levels and options when purchasing title insurance.

Below are three common types that potential homeowners should consider:

  • Owner's policy - This covers the buyer for as long as they own the property and is typically issued simultaneously with a lender's policy.
  • Lender's policy - The lender requires this coverage to protect their interest in case a dispute arises over who owns the property being used as collateral for the loan.
  • Leasehold/tenant-in-common policies - These policies protect owners of leasehold interests or tenants in common from certain risks related to their ownership rights on leased properties.

What Are the Benefits of Title Insurance?

Title insurance offers assurance that no one else can claim ownership over the property and helps to protect it against legal disputes involving liens, encumbrances, or other matters related to its title.

Title Insurance benefits buyers and lenders by offering protection against losses due to title defects such as forgeries, undisclosed heirs, missing documents, incorrect signatures, or tax errors. The policy also covers court costs associated with defending against challenges to ownership rights.

These protections are especially valuable during times like now, where closing on homes can take longer than usual due to delays beyond our control.

What Are the Limitations of Title Insurance?

Although title insurance has its advantages, there are some limits to what it can do.

For one, title insurance doesn't cover issues arising after your property's closing. If you discover something wrong later on, you're responsible for taking care of it yourself or hiring a professional to help set things right.

The policy won't provide coverage if someone challenges your ownership rights in court due to an error or omission described in the policy itself'so be sure to read over all documents and understand what your title insurer covers before signing off on it.

How Do I Get Title Insurance?

Acquiring title insurance is like putting a security system on your home: it provides the peace of mind that an asset is protected.

When purchasing title insurance, there are three key steps to remember:

  1. Find a reputable title insurer - Research and compare different companies for the best coverage and rate. Make sure you take into consideration any additional fees or costs associated with their services as well.
  2. Have them search public records – This will help ensure that no other claims have been made against the property before purchase. The title company should also guarantee clear ownership rights over the entire duration of ownership.
  3. Finalize the policy - Once all paperwork has been completed and approved by both parties, the policy can be finalized and issued. However, read through everything carefully to understand what type of risk protection you are receiving from this provider before signing off on anything.

By following these simple steps, buyers can rest assured knowing they have taken measures to protect themselves against unforeseen issues.

Get Title Insurance Today - Call Bosshardt Title Insurance

Title insurance is an essential part of the property buying process and should not be overlooked.

So don't take any chances when protecting yourself and your hard-earned money; make sure you're covered by a comprehensive title insurance policy, starting with a consultation with the Bosshardt Title team today. Contact us now.

About the Author

Kim G. Bosshardt

Board Certified Real Estate Attorney


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