When buying a house, there are a lot of key terms thrown around – buyer’s agent, sellers’ agent, mortgage rates, and closing dates are just a few. But one of the things that many homeowners don’t know a whole lot about until they come to the closing table is title insurance. Namely, what it covers and why it’s important.
Why exactly do I need title insurance?
When you first hear about title insurance, it might seem strange. After all, you’re already paying for homeowner’s insurance – why would you need additional coverage? In truth, title insurance and homeowner’s insurance are completely different policies that cover vastly different aspects of your home investment.
Title insurance covers a variety of things that are not covered by traditional home insurance. Where your homeowner’s insurance policy covers events that take place after you purchase your home, your title insurance protects you from claims and losses due to circumstances that occurred before you bought your home.
On top of this, as part of the terms of your property mortgage, most lenders require you to obtain title insurance. This is because title insurance doesn’t just protect you in the purchase of your home, it protects the lender’s investment in your mortgage.
So, what does title insurance cover? It can cover a variety of things, depending on the type of policy you purchase.
Basic Title Insurance
A basic title insurance policy, which we refer to as Owner’s Title Insurance, gives you great standard protection against defects and liens throughout the history of your home title, up until the date your deed is entered into public record. Essentially, this protects you from any past claims in the history of the property before you owned it.
How can I better protect my home investment?
For more comprehensive coverage, we offer a second level of title insurance, referred to as the Homeowner’s Policy. This policy offers additional protection*, for both you and your heirs, for as long as you own the property. It protects against some common issues that aren’t covered by a basic policy.
For example, our Homeowner’s Policy can offer building permit violation coverage, which would keep you protected if you must remove an existing structure from your property that was built by a previous owner who didn’t get the permits required for the work.
It can protect you if an entity like a Homeowner’s Association attempts to enforce an existing restrictive covenant against you, for a violation that occurred before you purchased the property. It can also help in situations where you’re forced to remove or fix a home improvement made by the previous owner due to a zoning violation.
Beyond this, our Homeowner’s Policy adds coverage for property encroachment, supplemental taxes for prior construction, and more. All in all, the extensive additional coverage this policy offers for common situations makes the Homeowner’s Policy a more comprehensive option for our clients looking for the most peace of mind in their home purchase.
*NOTE: While this expanded coverage may be the best choice in most residential transactions involving platted lots with an existing home, not every transaction will qualify for this coverage, including, but not limited to, waterfront homes, large acreage, or if the buyer is a corporation. Please contact us to see if your property qualifies.
Have questions? We can help!
When you’re making the decision regarding which policy to purchase, we want you to have the right information to make an informed choice. If you have questions about the different types of title insurance policies available to you, we’re happy to help. Just reach out by email or phone, and our team of experts will get you the information you need!