How Title Insurance Protects Your Investment

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Purchasing a new piece of property is an important process. That’s why attention to detail and taking care to ensure everything in the process is done properly is worthwhile. Having legal experts examine titles and give their opinion can save you from heavy financial stresses. This goes for both buyers and lenders, and title insurance is the crucial tool that keeps both parties safe from potential legal issues throughout the purchasing process. 

 

What is Title Insurance?

Title Insurance is essentially an insurance policy purchased at a one time price that protects buyers and lenders from issues that could arise during, or after, closing on a property. Most commonly, title insurance protects home purchases. Lender’s title insurance is generally required, while owner’s title insurance is not required, but strongly encouraged. We will further address some of the differences between the two types of title insurance below. 

It’s possible for title claims to arise at any moment throughout the home buying & owning process, sometimes even years after your purchase. Title insurance protects you from these situations that can arise and lead to you losing your home, or facing significant financial stress. Let’s look at some examples of such situations.

 

What Does Title Insurance Cover?

Title insurance covers an array of problems that can arise in the process of buying and owning a property. Experts in the title insurance field are able to track down potential risks before buying, keeping buyers and lenders safe. When buying a home, there are several common risks that title insurance protects you from. 

  • Liens: A lien is a legal claim against your assets in order to ensure payment for a debt or service. For example, if a homebuilder wasn’t paid for the completion of the home, they may have a legal claim against the home, allowing them to legally take possession of it if the debt remains unpaid. Liens can even arise well after the purchase of a home has been completed. Title insurance protects the buyer from encountering such a problem. 
  • Fraud: There are a few different forms of fraud that can pose risks to homebuyers, including forgery on legal documents. For example, someone may make a claim on your property through a forged will. You would be protected with title insurance. Title insurance also protects lenders from fraud. For example, a borrower may make false statements in order to secure a mortgage loan. This fraud is also protected against.
  • Document Errors: Another possible risk covered by title insurance is the possibility of document errors. Simple mistakes can be made and overlooked along the way. These mistakes can have inconvenient legal consequences. For example, inaccuracies found in a property’s recorded ownership history can lead to other parties making surprise claims against your home after purchase. Title insurance protects buyers from this risk.

There are many other risks covered by title insurance. This is by no means a complete list. For more examples of risks covered by title insurance for both owners and lenders, contact MM&G today.

 

Owner’s Title Insurance vs. Lender’s Title Insurance

As previously mentioned, there are two types of title insurance. Owner’s title insurance is title insurance that protects those purchasing a piece of property from the various types of potential errors and fraud. This keeps them safe from previous ownership issues with the property, liens, fraud, and more.Owner’s title insurance is not required before purchasing property, but it is very strongly recommended.

Lender’s title insurance is slightly different. It keeps the same spirit of protecting from fraud and other risks, but for the lender who funds the buyer. As mentioned before, if a buyer were to make false statements in order to secure a home loan from a lender, they would be protected. This type of title insurance is generally required by the lender.

 

Title Insurance Services from Muncie, Mattson, & Gunter

Muncie, Mattson, & Gunter, Attorneys at Law, are professionals in residential & commercial real estate law. Offering in depth title examinations and opinions, we help keep East Alabama safe when purchasing a new property. We also offer issuance of owner’s and lender’s insurance.

If you are entering the purchasing or lending process, MM&G is ready and willing to help keep you safe from fraud and other risks. Contact us today for more information, or give us a call!

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