What is an owner’s title insurance policy and do I need it?
Title insurance protects you from loss caused by matters affecting your property’s title. When buying or refinancing, most mortgage lenders require a lender’s policy of title insurance, but this policy only covers the lender’s interest – not the owner. In order to fully protect your property, a separate owner’s policy must be obtained.
Why would I need an owner’s policy when I obtained a title search?
Before a real estate transaction closes, your real estate attorney should obtain a title search. A title search discloses any deeds, liens, or other legal claims affecting the property. However, a title search can only disclose those title issues that are found in the public records. Frequently, homeowners experience serious issues affecting their title that are caused by issues that were not and could not have ever been discovered by a title search. In addition, title searches frequently fail to identify title issues. In fact, according to the American Land Title Association, title problems were found in over 1/3 of all residential real estate transactions!
Common issues affecting title:
- Unknown liens
- Errors in public records
- Survey and boundary issues
- Community association liens
- Taxes and special assessments
- Adverse possession
- Incorrect property description
- Fraud and forgery
Not only can an owner’s policy of title insurance protect you against these title issues, but the title company may be required to defend you in court and reimburse you for your loss if you lose the case.
Every property and title insurance policy is different. Title issues are complicated and fact specific. When a title issue arises, it is essential that you understand your rights. The attorneys at Sandelands Eyet LLP have significant experience representing clients in all types of title disputes. If you are currently dealing with a title issue, we encourage you to contact us to discuss your particular situation.