Entitled to title insurance
The definition of entitled is believing oneself to be inherently deserving of privileges or special treatment. That doesn’t exactly define the need for title insurance when purchasing a property. Title insurance is something you have to purchase, you’re not entitled to it, however, it’s something that you definitely deserve.
Title insurance has been around in the United States since 1876. Prior to this buyers bore sole responsibility for ensuring the validity of the land they were purchasing, Thankfully, that is no longer the case. Before a sale is completed, which is contingent on obtaining a mortgage, a lender will require that title insurance is purchased in order to guarantee that the title is free and clean. Essentially they want assurance that there are no delinquent taxes, unpaid liens, undisclosed heirs or property line disputes. This is achieved by the title company searching public records and verifying to the bank that their money is secure.
For the privilege of obtaining a clear title for the bank, you the buyer will pay for it. Title insurance rates are tied into the value of the home, so the higher the purchase price, the more the premium will be. This is a one- time charge at closing – one of the more expensive elements of a buyer’s closing costs. Rates are regulated in all states, so you could shop around, but the premium will be similar for any reputable title company.
However, you as a buyer are not done yet. There is another title insurance that all buyers also need to be aware of and one that will be offered to you at the time of closing. Homeowner’s title insurance assures a purchaser that the title to the property is free from all defects, liens and encumbrances even after the mortgage is paid off. Basically the homeowner’s title policy insures that portion of the property’s value not mortgaged or the equity in the property.
Lender’s title insurance protects them during the life of the mortgage, but what happens after the mortgage is paid off and a title issue appears when you’re just getting ready to retire? Homeowner’s title insurance will provide that extra security extending to the time you sell the property. In addition, if purchased at the same time as the lender’s title policy, the premium will be more affordable.
There have been a lot of all cash transactions recently, not only in our area, but also across the country. If you are not mortgaging your property, you may be tempted not to incur the expense of title insurance at the time of closing. Please don’t even consider this option. Penny wise and pound foolish could leave you being the fool. When you’re ready to close and a cloud on the title is found, it could end up costing more money in legal fees than title insurance will ever cost.
At the risk of sounding like a crotchety old person, I’m finding the need to check and recheck any important transaction that I’m involved with. I seem to be finding mistakes on almost everything, and the last place I want to find a mistake is on the title to my property. Forget about entitlements. What you really need when purchasing a home is a nice clean title. In fact, it’s the only title that matters.
