What is Title Insurance?
Title insurance is a type of insurance policy that protects the owner or lender against financial loss due to defects in the title of a property.
Title insurance is purchased as part of a real estate transaction or it may be purchased as a stand-alone policy. The policy is designed to protect the insured party (either the homeowner or the lender) from financial losses that may arise if there are issues with the title, such as:
- Ownership disputes: If someone else claims to be the rightful owner of the property.
- Liens or encumbrances: Unpaid debts or claims against the property that could affect the new owner.
- Errors in public records: Mistakes or inaccuracies in the property’s title documentation.
- Forgery or fraud: Instances where the title may have been fraudulently transferred or obtained.
- Other property issues: Contraventions of that might have been disclosed by an up-to-date survey, if no survey is available.
Types of Title Insurance
There are two main types of title insurance:
- Lender’s title insurance: Required by lenders to protect their investment in the property until the mortgage is paid off or refinanced.
- Owner’s title insurance: Provides protection for the owner as long as the owner or their heirs have an interest in the property.
If you purchase a property and are obtaining a mortgage, both policies will be obtained as part of the closing.
It is important to remember that the role of title insurance is to reimburse for any losses that may be suffered as a result of any of the foregoing problems. While the title insurance company might be able to fix the problem, not all problems can be fixed. In those instances, the title insurance company may provide financial compensation for the loss incurred.
Title insurance coverage lasts as long as the insured party or their heirs have an interest in the property. In other words, if you received title insurance as part of your purchase of the property, it remains valid as long as you own the property, even if the mortgage has been repaid.
It is important to retain a copy of your title insurance policy, so that you know which title insurance company has provided coverage.
Title insurance is a one-time premium paid at the closing of the real estate transaction. The cost of title insurance is based on the purchase price of the property, as well as the registered mortgage amount.
Frederikse Law – Burlington
We invite you to reach out to us today. Let our expertise guide you in making informed decisions about your real estate transactions and help protect your valuable assets. Contact Us as Frederikse Law.
