Four Frequently Asked Questions About Title Insurance

November 7, 2017

Real Estate

Hand signing title insurance

Why should I get title insurance?

Title insurance is designed to protect you in case someone in the future makes a claim against your property. These claims could include money owed on an outstanding deed of trust, a mechanics lien, or even disputes over the boundaries of the property.* Unfortunately, there is no way to prevent someone from making such claims, even if they are completely false, and the legal costs of defending against such claims can add up very quickly.

With a title insurance policy, the title insurance company would step in and defend you against these claims and even pay you up to the purchase price of the property if you were to lose the case.

*To make sure your property boundaries are insured, you must give the title insurance company a copy of a recent survey at the time you purchase the property.

Do I need a title search?

Yes, you should always have the title searched before buying property. The only way to know for certain that a parcel of real property has a clear title is to perform a title search and have a real property lawyer certify the title.

For instance, there could be a judgment against one of the sellers (or prior owner), an outstanding deed of trust or mortgage, or other issues that could cause you problems in the future.

How much does title insurance cost?

The premiums for title insurance are regulated by the state based on purchase price, so the costs for obtaining a policy are kept relatively low compared to the purchase price of the property. The premium is based on the purchase price, but may be reduced if there is a prior policy with the title insurer.

If you are using a loan to finance the purchase price of the property, your lender will require you to pay for a lender’s title insurance policy. The cost of the lender’s policy will be based on your loan amount and will offset the additional premium needed for your owner’s title policy.

If my lender is getting a title policy, why do I need one?

Contrary to popular belief, a lender’s title insurance policy is virtually useless to the actual owner of the property. The lender’s policy will only apply if a claim is made on the property that affects the lender’s ability to obtain repayment.

A common scenario in which this could occur is if someone claims an interest in the property that is superior to the lender’s interest. Importantly, the lender’s policy does not require a title insurance company to defend your rights or cover your expenses in defending your rights.

At Helms Law Group, P.A. we have attorneys who can help you with any real estate closings or questions. If you are interested in scheduling a consultation or a closing, please contact our office at 704.289.4577.

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