Once you buy a home, you will need to be sure there are no issues with the title of the home. If there is a problem with the title, then it can limit the use and the enjoyment of the new property. It can also bring on financial loss.
Title Search
Once the sales contract is accepted, a professional of titles will then search for public records in order to look for any potential problems with the property’s title.
The search will normally involve a review of any land records that go back several years.
It is the job of the professional to fix the issues before the closing on the property. For example, if a previous owner had minor construction completed on the property, but has never paid the contractor; it is the job of the professional to solve the issue.
Owner Title Policy
There are times when a problem can occur that cannot be found by the public records or are missed during the search process. In order to help protect you, it is highly recommended that you have an Owner’s Policy of Title Insurance. This will ensure that you will not be subject to any issues that are unforeseen.
The Owner’s Title Insurance, also referred to as Owner’s Policy is typically issued in the total amount of the property purchase. It is a one-time fee during the closing and will last for as long as you or any heirs have interest remaining on the property. Only the Owner’s Policy will fully protect the buyer and should a covered title issue come up that was not found during the search, it will be taken care of. Possible issues that can arise are:
- Mistakes in Records
- Forgery
- Errors or even Omissions in the Deed
- Undisclosed Heirs
The policy will provide the assurance that the title company will stand behind the buyer monetarily and will provide legal defense should it be needed. The bottom line is the title company will be there to aid in any valid claims. You are also even able to purchase expanded coverage.
It is called Homeowner’s Policy and it will cover other things that the Owner’s Policy does not cover. Talk to the local title company and ask for an explanation of the Homeowner’s Policy they can offer you.
Loan Policy
There are different types of title insurance. Owner’s Title Insurance and Lender’s Title Insurance. Most of the lenders will typically require a Loan Policy in which they will issue a loan.
The policy is normally based on the amount of the loan. It will only protect the lender’s interests in the home. Should an issue come up, it will protect the lender.
It does not help the buyer. The policy amount will decrease with every year and will ultimately disappear as you pay off the loan. The bottom line is that the policies are crucial in order to protect you from unforeseen issues that may come up before and after purchasing your home.