About 35% of real estate deals have problems with the property’s title. This makes title insurance a must-have when buying property. It is also why mortgage companies and lenders require title insurance when lending to real estate buyers. For many people, a title search and insurance are just one of the many steps included in the closing process. However, they are so much more than that. This guide will explain five things you didn’t know about title insurance and searching a title’s history.
1. Title Insurance Is a One Time Purchase
Unlike other insurance products, title insurance is a one-time purchase. This is nice because you don’t have to factor in another reoccurring bill to your monthly budget. For most purchasers, the cost is included in the final closing of a real estate purchase.
2. Choose For Yourself
The majority of lenders have their preferred title insurance company. Your lender will likely encourage you to use this insurer. While you can, you aren’t required to. You have the ability and freedom to choose who you will purchase coverage from. There are many companies available, and it can become overwhelming. It could also take more time than what you have available if you are trying to close quickly. However, if you stick with it, research, and compare prices, you should be able to save. You can then use those saved funds for other home projects.
3. It Covers New Construction
Your new real estate likely had a previous owner, even if it is undeveloped land. This is especially true for real property that passed ownership through inheritance laws. These changes in ownership are not always recorded. Sometimes property gets divided up or uses change over time, which changes the visual property from the true and legal property lines. Title insurance protects your property even if it doesn’t have any buildings or structures on it. This gives you peace of mind as you move forward with the development of a property.
4. Buy It At Any Time
You can buy title insurance for a property that you already own. It isn’t just for those in the process of buying real estate. For most people, purchasing title insurance is a part of the closing process because they are using financing to buy the property. The mortgage company or lender will require title insurance as a method of protection. When you buy property without a lender, there is no one requiring this type of insurance. That doesn’t mean you aren’t at risk of title defects. You can purchase title insurance as a part of closing or at any time after the purchase to obtain coverage for your real estate investment.
5. You Could Research a Property Yourself: But Shouldn’t
While you could channel your inner librarian and research a property’s history yourself, this isn’t a good idea. There are many databases, and some are not available online. It will take time, effort, and money to perform a thorough search. Without experience with this type of research, you could easily miss conflicts of title. The insurance company may not accept your research and require you to hire a professional to perform the search for you.
Experts in title research know that you have to follow the chain of title both forward and backward through time. This can illuminate multiple chains of title and potential completing claims of ownership. They will also look for alternative spellings for associated names. Sometimes, names are entered incorrectly and will not show up in initial searches.
Seek Legal Guidance for Your Title Insurance and Search
As with any purchase of investment strategy, you want to reduce your risk and protect yourself. Having a thorough title search performed and purchasing title insurance ensures you are protected. It reduces the amount of risk involved in the purchase. Otherwise, you are on your own to defend your ownership against any conflicts that may arise with your ownership or use of the property.
Schedule a consultation today and speak with one of our skilled attorneys about your title insurance and search needs.
