Owning a home is one of the most important parts of the American dream, but having the deed to a piece of land does not necessarily mean the property is yours free and clear. Other people may have certain prior rights or claims that your deed will not erase. Such rights can go back all the way to the earliest owners of your new property. In order to protect your investment, you may consider purchasing title insurance.
Getting your property covered
If you decide you want owner’s title insurance, companies offer “simultaneous issue credit” as long as you buy the owner’s insurance within 30 days of closing (and buying the loan policy). Simultaneous issue credit decreases the amount of your premium.
If the house you are buying was owned by the seller for only a few years, check with the seller’s title company. You may be able to get a “re-issue rate,” because the time between title searches was short. If no claims have been made against the title since the previous title search was done, the insurer may consider the property to be a lower insurance risk.
Look for an “owner’s title policy” with as few exclusions from coverage as possible. Exclusions are listed in each policy, and if a policy has many exclusions – that is, situations under which the insurer will not pay for your title problems – you may end up with little coverage.
Frequently Asked Questions
What does a title insurance agent do? Title insurance agents check for defects in your title by examining records on file at the Register of Deeds office. These records may include deeds, mortgages, wills, divorce decrees, court judgments, tax records, liens, and encumbrances. If any problems are found, those items will usually have to be cleared before the mortgage company will loan you the money or allow you to take possession of the property.
At the time of closing the agent should explain the title policy commitment, and any exclusions found on pages numbered Schedule A and B. Once all closing papers are signed and filed, the title commitment provides coverage until the title insurance company issues the actual policy. Title insurance agents also may hold money in escrow and perform closing services for an additional fee.
Who pays for the policy? Usually the purchaser of the property is required to buy the lender’s title insurance policy. This policy only protects the lender’s interest. Either the seller or the purchaser can buy the owner’s policy. The party who will pay for the owner’s policy can be negotiated during the purchasing process. The owner’s policy protects you, the new owner of the property, from any defects in the title once you take possession.
Homeowner tips provided by Intown Atlanta Real estate