Real estate title insurance protects property buyers and lenders against potential risks and defects associated with the property’s title. Here are six key protections that title insurance offers:
- Protection Against Hidden Defects: Title insurance helps protect against hidden title defects that may not be discovered during a title search, such as forged documents, undisclosed heirs, or fraudulent conveyances. If a defect arises after the purchase, the title insurance policy covers the costs of defending against claims and potential losses.
- Coverage for Prior Claims: Title insurance policies typically cover issues before the policy was issued, which means that even if a problem with the title arises from the past, the policy can provide protection. This can include unpaid liens, undisclosed easements, or unresolved judgments.
- Coverage for Fraudulent Transactions: Title insurance can provide coverage if a property is fraudulently conveyed or sold without the valid owner’s consent. This is especially important in cases of identity theft or fraudulent property transfers.
- Legal Defense Coverage: If someone challenges your property ownership due to a title defect, the title insurance policy covers the legal costs of defending your ownership rights in court.
- Peace of Mind for Lenders: Lenders also benefit from title insurance by receiving lender’s title insurance. This policy protects the lender’s interest in the property and ensures their lien is valid and enforceable.
- Assistance in Resolving Issues: If a title issue arises, the title insurance company will work to resolve it. This can include negotiating with other parties, paying off valid claims, or taking legal action if necessary.
It’s important to note that title insurance policies have specific terms, coverage limits, and exclusions. Before purchasing a policy, it’s recommended that you carefully review the terms and conditions and discuss any questions with your title insurance provider.