By Liz Scavnicky-Yaekle
Whether dealing with a home or commercial property real estate transaction, the entire process can feel overwhelming. That’s why the knowledgeable and courteous professionals at Millennial Title walk clients through every step of their new home purchase, refinance or commercial acquisition process.
Here are three important aspects about title insurance.
1. Title insurance is not required for home ownership—rather for home ownership protection. Owning a home without title insurance is risky because the buyer is not protected from claims against ownership of the property and therefore could lose the investment. Title companies perform thorough title searches which are critical because more than one-third reveal an issue that title professionals will insist on fixing before the transaction closes. These issues can result in having to delay a scheduled closing until all of the title issues are resolved.
Practically everyone buys title searches and insurance to avoid nightmare scenarios such as hidden taxes, encumbrances, restrictions—basically anything that devalues the home or is inaccurately recorded in the deed. When buyers believe that they trust the seller, such as if purchasing from a family member, and do not purchase title insurance, they aren’t protected against unforeseeable issues that may arise later on down the road. This is why it’s critical to have a reputable title company perform the search and to buy a title insurance policy.
2. Title insurance is a two-part transaction. In the first step, the title company performs the aforementioned comprehensive search of property records to ensure that there aren’t any clerical errors, mistakes in examining records, undisclosed heirs, omissions in deeds, unknown liens or fraud involving the deed. The purpose of this process is to verify that the seller is the true owner of the property and is therefore free to sell it.
In the second step, the title company engages an underwriting company to issue an insurance policy that would cover the cost of the expenses to defend the title should anyone challenge it. There are two policies typically required—an owner’s policy and a lender’s policy to protect each respective party properly.
3. Title fees are included in closing costs. The home purchase contract and any applicable government regulations determine who pays which closing costs. Sometimes this varies depending on the state or county in which the property is located-fees are negotiated on a by-contract basis. Contact us for a quote and clarification.
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