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What is Title Insurance and why do I need it?

Title Insurance is possibly the most valuable addition you'll ever make in the investment of your home.


There are two main types of insurance: an owners policy and a lenders policy.


An owners policy protects the current owner or new buyer for the legitimacy of the chain of title. If someone makes a claim to the land you purchased, you are covered by this policy and the title company must defend your interest in court, clear up the title problems or pay your losses. You pay only once for an owners policy and it lasts as long as you, or your heirs, retain a legal ownership in that property.


Without an owners policy of title insurance, you may be in danger of losing your real estate or having it encumbered. An owners policy protects you from title defects, including possible hidden problems that may arise that result in a claim against your ownership.


A few examples of those hidden problems are:

  • False impersonation of the true owner of the property

  • Forged deeds, releases or wills

  • Undisclosed or missing heirs

  • Instruments executed under invalid or expired power of attorney

  • Mistakes in recording legal documents

  • Misinterpretations of wills

  • Deeds by persons of unsound mind

  • Deeds by minors

  • Deeds by persons supposedly single, but in fact married

  • Liens for unpaid estate, inheritance, income or gift taxes

  • Fraud


The Loan policy protects the lender against loss due to unknown title defects. It also protects the lender's interest from certain matters which may exist but not be known at the time of sale. This policy protects only the interest of your lender and is not transferable if you assume or refinance your mortgage. Typically, a loan policy is a requirement to obtain a loan and, as such, the borrower pays for it.

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