What Is Title Insurance and How Much Does It Cost? BY | BOB DEEB, NOVIT & SCARMINACH Many real estate purchasers view title insurance as one of many closing costs added to their settlement statement which has little or no benefit to them. While title insurance isn’t popular, it does have benefits, and not purchasing title insurance for your real estate investment could result in expensive problems long after closing. When you purchase real estate, you will purchase insurance coverage to protect your property against loss from fire, flood, theft, earthquake, or wind damage. Those policies pay you to restore your home after damage to the improvements. Title insurance protects against hidden title hazards that may threaten your financial investment in your ownership interest to your property. Title insurance pay you when others claim ownership interest in the title to your real estate. When purchasing real property, you are purchasing the title to the property – and you receive a deed from the seller conveying the seller’s title to the property. That title may be limited by rights and claims asserted by others, which may limit your rights to the property resulting in financial loss. Title insurance protects against these types of title hazards. Other types of insurance protect your property from possible future damage and charge 6 HILTONHEADHOMES.COM an annual premium. On the other hand, title insurance protects against loss from hazards and defects that already exist in the title to the property and is only paid by a one-time premium. The two basic kinds of title insurance are lender’s title insurance and owner’s title insurance. Nearly all lenders require insurance as security for their mortgage, just as the require fire and flood insurance for protection. Title insurance gives lenders assurance that their mortgage is protected in the event they must foreclose on the borrower’s mortgage loan. If there is a claim on title if the lender forecloses, the title insurance company will pay the lender any loss suffered or otherwise defend against the title claim on behalf of the lender. Owner’s title insurance lasts as long as you have an interest in the insured property. This may even be after you have sold the property. While your closing attorney will search the public land records affecting your real estate, sometimes recorded documents don’t clearly transfer title. Some examples are deeds, wills and trusts that contain improper wording or incorrect names, easements precluding construction, pending legal action against the property, fraudulent documents, and incorrect notary acknowledgments. Through the title examination, title problems are disclosed so they can be corrected whenever possible. However, even the most careful, preventative work cannot locate all hidden title hazards such as a forged signature on a deed, which would mean no transfer of ownership to you, an unknown heir of a previous owner who is claiming ownership of the property, instruments executed under an expired or a fabricated power of attorney, or mistakes in the public records. Title insurance offers financial protection against these and other covered title hazards. The title insurer will pay for defending against an attack on title as insured, and will either perfect the title or pay valid claims – all for a one-time charge at closing. Title insurance premiums are based on the purchase price, or the mortgage amount, being insured. For example, buying a $750,000 home financed by a $560,000 mortgage would require lender’s coverage in the amount of $1,278 and owners’ coverage in the amount of $442. That one time premium is not material considering your $750,000 investment. Your home is your most important investment. Be sure to protect your home with an owner’s title insurance policy. Internet Marketing that Works for You When you’re selling your home, you need a real estate company that covers the web. Lancaster Real Estate Sales is the Number 1 real estate Internet marketing firm in the area. Our website, HiltonHeadHomes.com consistently ranks on page 1 of Google for the most search terms related to Hilton Head. That means people will find our website and find your property. (843) 785-9500
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