When buying a house, there are important things to consider, such as the owner’s title insurance policy. This insurance protects you if there are any problems with your property ownership or deed after you’ve bought the house.
Issues that can be covered by owner’s title insurance include:
- Mistakes with the deed, like incorrect recording of your legal name, which can create ownership confusion.
- False information on the deed, like forged signatures or altered property details.
- Mortgage fraud, where a previous owner falsely claimed to have paid off the mortgage, leading to foreclosure.
- Liens filed against the property for unpaid debts, such as unpaid fines, contractor fees, or property taxes.
- Encroachments, when a neighbor builds on your land without permission, violating your property rights.
- Easements, where someone else has rights to a part of your property, like a utility company.
Title insurance reduces the risk for buyers who may be unaware of these problems. It is especially valuable the longer you own your home, as issues can arise at any time. Owner’s title insurance is separate from the lender’s title insurance, which only covers the lender’s investment.
In some cases, owner’s title insurance is not required by law, but it is recommended. The cost is typically the responsibility of the buyer, but in some states, the seller may cover it. The policy covers legal fees, court costs, and certain financial losses related to title disputes.
The pros of owner’s title insurance include peace of mind, relatively low cost compared to potential risks, protection for new or old homes, assurance of a thorough title search, and coverage for legal expenses and liens. The cons include the cost and the fact that it may not be necessary for short-term property ownership.
It’s important to consider title insurance, even if you have little or no down payment, as it can cover legal expenses that may arise from fraudulent information on the deed. Issues can also arise when properties are passed down through generations, so having title insurance can provide protection.
If you have more questions about buying a home, including mortgage-related costs, it is beneficial to consult your friendly Neighborhood Title of Texas.
