How Can Title Insurance Protect Your Home?

If this is the first time that you are buying a property then it’s also likely that this is the first time that you have heard about title insurance. Not known to non-homeowners, title insurance is a powerful product who can provide serious financial protection for your home and its title.

What Exactly Is Title Insurance?

Consider a scenario where you purchased from a seller who you trusted. Just like buying from the Groupon Coupons page for Shutterfly, the process went smoothly and without any hitches. The process has been completed, the money is in their hands and the house keys are in yours. Since then, you have moved in are beginning to make personalizations to your home.

However, seemingly out of nowhere, you receive a letter advising you that a claim of ownership has been made to the title of your property. The claim was lodged by a sibling of the previous owner you purchased the property from. You see, the seller wasn’t entirely upfront with their information and actually forged their siblings signature in order to take full ownership from inheritance.

While the sibling didn’t know, they have recently been made aware and now want their rightful share of the property.

What Happens Next?

If the claim is found to be legitimate and legal, the claimant can demand the sale of your home for the sole purpose of recovering monies owed to them, which they should have received through the initial sale of the home to yourself. This is often an amount set by a judge deciding on the claim.

Given that you have signed the papers, this claim is now your financial responsibility, leaving you to either make a payment to clear the claim or allow your new home to be sold and for a portion of the money to be given to a third party, leaving you with whatever is left over, if there is anything.

How Can Title Insurance Protect You?

The first stage of obtaining title insurance is the most important. A qualified and trained professional will scour through the history of your dream property to look for any inconsistencies or errors such as the situation mentioned in the example above.

Once uncovered, they are reported to you so that you can either take them up with the seller for them to resolve or simply choose not to purchase the property.

Once the concerns have been cleared or no concerns have been found, a policy for title insurance is drawn up. For a one-time payment, available only prior to settlement, a title insurance policy provides you financial protection for the title of your home.

In the above example, with the existence of a title insurance policy, the owner would retain ownership of their home with the title insurance agency compensation the sibling to resolve the claim.

Whether or not you get title insurance is completely up to you, however, as you can see, there is much which can happen prior to you even stepping foot on the property which could affect your future homeownership.

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