Purchasing property can be risky. A newly purchased property can have many issues, such as unpaid tax liens, an ownership dispute and title issues, just to name a few. What does title insurance do? Title insurance companies play a vital role in protecting buyers from loss if the title is defective. If there is an issue regarding the validity of the title, the title insurance company is responsible for investigating and settling the conflict.
Title insurance companies can perform title searches to look for problems with the title. Title insurance can be purchased in both residential and commercial real estate transactions. When deciding the eligibility of the property, the title insurer examines the title of the property to determine the current ownership of the title and any possible title defects. Depending on the nature of the property, the title insurer will calculate the requirements that must be satisfied as a prerequisite to the title insurance. Title insurance will then be paid only once when closing on the property.
How does it work? Title insurance helps buyers by removing the risk of any loss or defects to avoid the financial losses resulting from unknown title defects. A title defect is any condition or circumstance that could cause the title to be considered flawed or invalid. Unlike other forms of insurance, title insurance provides protection against defects that may have occurred before the transaction.
The two most common types of title insurance policies are loan insurance and owner’s insurance. A lender’s title insurance policy, also called loan insurance, is designed to protect mortgage lenders in the case of title defects or title disputes. A title company’s closing documents are not always perfect. We often find errors in closing documents, which is why clients hire us to review closing documents.
Real estate transactions are a major investment and title insurance can offer vital protection for your assets. We invite you to contact our board-certified real estate attorney to review your closing documents regarding a property transaction or to help you navigate the title insurance process. Our number is 713-454-7875.