A Guide to Real Estate Title Insurance | Topouzis & Associates, P.C.


February 22, 2022

A Guide to Real Estate Title Insurance

Real estate transactions can be extremely complicated and fraught with potential errors or problems. One way to keep yourself protected in the event of any issues arising after you’ve already closed on your new home is through the purchase of title insurance, which protects against financial loss due to property ownership issues that are either unknown or not able to be entirely resolved by the time of sale. Whether you’re a first-time home buyer or an experienced investor, here’s what you need to know about real estate title insurance, including how it works and how it can benefit you.

What is a title search?

When purchasing a home, one of your most essential considerations is securing ownership of that property. A title search will tell you if there are any problems with your deed or title that might come back to haunt you in the future. If a mistake has been made or someone else has an interest in your property (even if they don’t have physical possession of it), that person can make things difficult for you down the road when trying to sell or refinance your home. Be sure you hire an expert to conduct a thorough and accurate real estate title search on your prospective property before making any decisions. You should also be aware that many lenders require them as part of their underwriting process. So how do you know who to choose? Look for local professionals who offer real estate title insurance solutions; they’ll understand your local laws and customs far better than anyone from out of town.

Why do I need title insurance?

Buying a home is one of life’s most substantial financial transactions, so both seller and buyer must be on equal footing. When you buy a home, you have no way of knowing what kind of person lived there before you. The last person who owned it could have done anything with it—even if they didn’t break in or damage anything visible from outside, they might have destroyed its title in ways that aren’t obvious at first glance. A property’s title refers to all legal rights about land ownership—it contains records of who owns the property and whether or not their own is legitimate. Whenever someone buys real estate, you want them to clear up any title-related issues beforehand; otherwise, it puts your ownership at risk later down the line.

How much does it cost?

You need to know about two costs when it comes to title insurance. The first is a one-time application fee, which will vary depending on your situation. For example, if you’re buying a lot of real estate for commercial purposes, you’ll pay more than someone who is purchasing just one home. On average, though, expect to pay $300 for a standard application fee.   The second cost involves policy fees; these are usually in line with other types of property insurance and don’t change much over time.

What does my policy cover?

Your Real Estate title insurance policy protects you in two ways: by ensuring that your closing and escrow agent did everything correctly (and so there are no title issues affecting your property) and by paying off any lender if a problem does occur. The most important thing to remember about title insurance is that it protects *against issues* with your property’s title. If there aren’t any problems, then you don’t need it! Here’s a quick rundown of what your policy covers.

And what it doesn’t cover: There are some exceptions to coverage under certain circumstances; one notable example occurs when you fail to disclose known defects or encumbrances on title at the time of purchase—in these cases, you will be responsible for them. Keep in mind that all requirements detailed above must be met before our coverage applies. If they aren’t, we won’t payout. Contact us with any questions!

What can go wrong with a purchase or sale?

There are many reasons why an offer on a property could fall through. For example, if one of these issues comes up, you may have trouble closing your purchase or sale. The following is a list of common title issues that can come up during any real estate transaction. It would be best to make sure there aren’t any errors in your paperwork and all outstanding liens and judgments are resolved before closing. Appropriately protecting yourself before you buy or sell real estate is essential. Let’s take a look at what you need to know #1: Getting Dispossessed: If there is still money owed on a property, even after a sale has been made, it doesn’t belong to anyone until it has been fully paid off. During settlement, it’s critical for buyers and sellers alike to ensure no payments are due within ninety days of settlement date—otherwise known as dispossession– for them to receive clear ownership of their new real estate investment. This means checking with each seller, ensuring they haven’t forgotten anything, and matching with mortgage lenders; buyers must also take care of any final mortgage payments, so they own their homes completely free and clear when they close. #2: Liens: Lienholders sometimes attach themselves to a piece of real estate for payment purposes. They can choose not to release their lien against a property, preventing someone from taking clear ownership. Before buying or selling real estate, it’s essential to locate any potential liens against that real estate and make sure they will be released by the time of settlement. In some cases, especially with construction loans and home equity lines of credit (HELOCs), borrowers sign over their interest in real estate assets as collateral for loans; lien releases are usually required before permanent records like titles can be amended.

How do I buy my policy?

The first step in buying a title insurance policy is deciding whether you’re insuring your home or something else. If you’re buying a house or another property, the chances are good that it will require a policy. All policies begin with an application; some companies let you fill out their form online and fax it back, while others request a hard copy mailed in through snail mail. Once your information has been received, they’ll investigate your property and you.

Where do I get more information?

Most real estate title companies offer free educational resources on their websites. If you’re still unsure where to start, try a web search for your state and title insurance or real estate title insurance. You may also find helpful information from local real estate agent associations. And don’t forget that you can always contact your state’s insurance or financial services department to get answers explicitly tailored for your region.