Why Do You Need Title Insurance
Why Do You Need Title Insurance?
Some people who don’t really understand the what title insurance is might question this line item on their closing cost statements. Title insurance, however, is a very important protection for the buyer in a real estate sale. The function of title insurance, as the name implies, is to ensure a clean title to your home, but only at the time the home transfers to you. Title insurance protects you if there are problems or hidden legal encumbrances tied to the title which were caused by past owners’ actions or failure to act.
Title insurance, in other words, ensures that that your ownership rights are protected from any kind of liability stemming from time before you purchased it. This policy provides coverage for the “before” period of home ownership, unlike ordinary homeowner insurance policies, which cover the “after” period.
After you buy your home, if it were to come to light that there was a lien for property taxes or construction work on it, title insurance would protect you from experiencing the financial loss from the event.
You certainly do not want to find yourself coping with the situation of purchasing a property and then finding out that there is a lien against it due to something done (or not done) by a previous owner. If you were uninsured, you would have been looking at a financial liability, which could be anything from a trivial annoyance up to a significant and fully enforceable liability resulting in having to lose the home.
A title insurance policy covers you against disputes that come up from errors or claims related to your home title before you bought the house. If for example, you purchase a home that was sold to you in a fraudulent manner, the title insurance policy would cover you against that potentially disastrous loss. If disputes were to arise with respect to the ownership of the home you have just bought, your title insurance policy would protect you.
What Title Insurance Is Not
Title insurance is not protection against things you might do to jeopardize your ownership. It is strictly limited to ensuring that you have a clear title to the home at the time that title is transferred. If for example you don’t pay the property taxes and a lien is filed, you will be responsible for settling the debt.
As one last reminder, title insurance does not cover any losses related to the belongings or the structure of the home. You also need to be sure to get insurance against theft and fire, and natural disasters with a good homeowners insurance policy. When you purchase a home, both title insurance and homeowners insurance are “must-have” kinds of coverage.
Article made available courtesy of Automated Homefinder, your best resource for finding Broomfield Colorado homes.
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