WHAT IS TITLE INSURANCE AND WHY DO YOU NEED IT?
WHAT IS TITLE INSURANCE? A title insurance policy pays the policyholder if there's anything wrong with the title for a property. In US states, the recorder of deeds doesn't guarantee perfect accuracy in its record-keeping. This means that it's possible for someone with an older document to press a claim on your newly purchased home, if there is evidence of past fraud or forgery. Title insurance pays for the cost of "perfecting" your title rights or provides compensation if you lose the property altogether.
Every title insurance policy covers either a homeowner or the lender that financed the mortgage for the property. Lenders require you to pay for lender's title insurance as part of your mortgage closing costs. Homeowner's title insurance is mostly optional, and is paid for by the seller or the buyer of the property. Title insurance coverage begins when you buy the policy and extends indefinitely into the past, covering both known and unknown inconsistencies in the documented history of ownership.
WHY DO YOU NEED TITLE INSURANCE? Purchasing lender's title insurance is a mandatory part of the mortgage process. However, it's often a good idea to buy title coverage for yourself as the homeowner. Title insurance can compensate you for damages or legal costs in a variety of situations. Title Insurance Protects You From… Previously unreported liens and easements on the property Forged transfers of ownership rights in the property Unintentional errors in recording or filing of documents Any other title defects that existed prior to the start of your policy
CAN YOU CHOOSE TITLE INSURANCE? You can choose your own title insurance company for both lender's and homeowner's title insurance, although few people actually do so. If you're considering purchasing a homeowner's policy for yourself, it makes sense to do your own shopping. Title insurers can often provide discounts if you purchase both sets of policies at the same time. There are four national title companies to choose from, along with dozens of smaller local insurers.
Sources:
https://artesiantitle.com/ https://www.valuepenguin.com/