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Understanding title insurance

Buying a new home is an exciting time. After saving for a down payment, scouring the listings and all the meetings with the realtor, you’re finally able to sit down and close the deal. Of course, closing isn’t as simple as writing a check and signing a couple of papers. There are always more legalities, insurance items and additional costs to sort out. One of the most common questions in closing is about title insurance.

What is title insurance?

In buying a home, there are two purchases: the plot of land and the home itself. The title is a legal proof that you own the property. Title insurance provides security that your newly purchased titled is legitimate.

What if the seller didn’t have legal authority to make the deal? Title insurance covers this. Its purpose is to protect against fraud and disputes. There are two types: buyer’s and lender’s insurance. It is a one-time payment and it covers the duration of ownership.

What does title insurance cover?

While realtors and lenders conduct thorough background checks on both you and the property, titles are important legal documents that follow property ownership through the generations. When someone sells you property, title insurance covers expenses related to a dispute about who had the right to sell the property in the first place.

While it sounds unusual, there are many reasons for disputed ownership:

  • Shared property with multiple owners
  • Probate-related claims on an estate
  • Construction liens for unpaid bills
  • Easements for use of property
  • Forgeries

Upon buying a home, a title agent will search for defects in your title, which could include any of the examples above. If issues arise, title insurance will help offset legal costs, potentially including the value of your property.

Protecting your investment

Buying a new home is exciting, but understanding the complexities of mortgages can be overwhelming. Although Florida does not require the assistance of an attorney at closing, it is common for homebuyers to seek advice from an experienced real estate lawyer when making such an expensive purchase. Whether you are buying a starter home for your young family or if you’re buying a home to last into retirement, it is a major transaction that will affect your future. Title insurance is one of many ways to protect your investment and to make sure that closing day is a positive experience.

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