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What is title insurance? Is it expensive?

If you are interested in buying a property, one thing you may want to look into having is title insurance. Title insurance is a kind of indemnity insurance that protects you against financial losses suffered as a result of defects in a property's title. There are several kinds of title insurance, with the most common being lender's title insurance. Owner's title insurance is also a possibility.

When you buy a property, the most important thing is that the title is clear. Without a clear title, it's impossible to know who has legal ownership of the property and there could be claims on the property that are not yet resolved. So-called "dirty" titles complicate purchases and are generally avoided by buyers.

What are the most common claims against a title?

One of the most common claims against a title is a claim that there are back taxes that were missed by the title company. There could also be liens on the property or conflicting wills that threaten the property.

Is title insurance expensive?

The cost of title insurance may vary based on the property and value being protected, but it's usually a one-time fee that covers the cost of searching title data as far back as the 1800s.

How do you get title insurance?

Title insurance is usually purchased upon the completion of the property purchase agreement. Your escrow or closing agent will be able to recommend a major title insurance underwriter if you'd like to buy title insurance.

Who does title insurance protect?

Title insurance is used to protect lenders and owners. It protects them against damages that are caused by defects in the title, liens or encumbrances. Title insurance is special in that it does protect against claims for past events, not just things that could happen in the future.

What does owner's title insurance protect against?

Owner's title insurance protects against many things including:

  • The discovery that another party owns the property
  • Flawed recordkeeping
  • Encumbrances
  • Judgments against the property
  • Liens
  • Incorrect signatures on legal documents
  • Fraud of title documents
  • Outstanding lawsuits against a property

What should you do if you face trouble due to a dirty title?

If you have insurance, it should help protect you. If you don't or are confused about the situation, then it's smart to reach out to your attorney to talk about the situation and if your title insurance will protect you against the problems you face.

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Lucas & Davis, P.A
209 West 2nd Street
PO Box 910
Kenly, NC 27542-5001
Phone: 919-284-5106
Fax: 919-284-6942
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